Big or small recognition budget? It’s how you use it that counts

It’s a fact that employee engagement in the UK has plateaued at one of the lowest levels seen in a developed economy. Businesses are in desperate need of motivated employees.

In an attempt to address this, companies are placing greater reliance on employee recognition to deliver meaningful results. For a long time results were not part of employee recognition thinking; the focus was on rewarding tenure. Hang around for 25 years and you would be rewarded with a watch or a pen. Approaches then started to evolve. Some companies realised that rewards could be used to drive performance, change behaviour, even nurture innovation.

But of course these rewards all cost money, and large employee reward budgets have been an easy target during difficult economic times. So what can your HR team do to make sure your reward and recognition budget, no matter what size it is, delivers the right results?

1. Focus on the outcome you want to achieve

Rewards are very enjoyable. They’re appreciated at the time of getting them and who would say no to a gift card or a meal out? We’re all human.

But the effect is short lived. What really matters is long-term engagement. Broaden your focus and start considering what really motivates people. It’s a sense of being seen and of making a contribution. It’s about being recognised. One-off rewards can support that sense of recognition. But if that’s all you do it turns recognition into an occasional treat rather than sustained engagement. Think instead about how that reward budget could be spent on a consistent ongoing process of acknowledgement and appreciation that reaches across all levels in the company.

2. Money is not the only motivator

Many companies still cling to the idea that money is more or less all that counts when it comes to motivating employees. They assume rewards and bonuses are needed in order to have any effect. But motivation isn’t as straightforward (or as expensive) as that. Assuming salaries are at a satisfactory level, there’s plenty of evidence that suggests it’s the non-financial motivators which are far more effective in building long-term employee engagement.

3. Cost effective doesn’t mean time consuming

There’s still a perception that recognising employees requires excessive amounts of management time. That used to be true and it explains why many recognition programmes failed.

But then social recognition platforms started to appear. They tapped into already established behaviours on social media and turned the concept into a way to express thanks and demonstrate appreciation in the workplace. The emphasis has shifted. The manager isn’t exclusively responsible for recognition. They don’t have to be constantly aware of everything every team member is doing. Social recognition lets peers and management at all levels reward each other simply by showing their appreciation for one another. Engagement doesn’t rely on being powered by budget-hungry rewards.

4. Show appreciation to all employees

If your approach to recognition depends solely on providing rewards, you need an extremely large budget. Or you need to be very selective about who you say thank you to. That’s the position many companies have been in for years and as a result they’ve only acknowledged the employees who’ve done something really exceptional. That may have left 10% of their employees feeling temporarily uplifted but it didn’t do much for the other 90%. No wonder engagement levels haven’t looked too healthy.

Keeping every employee engaged means telling every single employee you, and others, value the contribution they’re making. Make your budget work harder by using it to recognise every employee’s efforts.

Undoubtedly how you use your reward and recognition budget is a critical investment decision. As with every other investment decision, you need to make sure you’re getting the best possible return. It’s time to challenge the assumption that rewards alone can deliver that return in terms of engagement. Employee recognition is being re-balanced, putting greater focus on what employees put in, and not just what they get out.