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The benefits of workplace recognition

7 min read

The benefits of workplace recognition
Workplace recognition is a powerful way of making employees feel valued and enhancing their performance. Whether it’s working overtime, completing a big project, or exceeding personal targets, noticing, and rewarding those efforts has a huge impact on both workers and businesses.
Remember that team morale can take natural dips, too. Some days are better than others - even in your dream job - and sometimes we need a little extra encouragement to get through the day. In such instances, recognition and credit can make all the difference to performance and overall job satisfaction.
In this article, company formation agent, 1st Formations, will discuss the key benefits of workplace recognition for both employees and employers, including improved retention and a healthy team culture. They will also share some useful strategies and top tips for introducing recognition practices into the workplace.

What are the benefits of workplace recognition?

There is a whole host of ways in which praise and recognition in the workplace can help improve your team’s morale and confidence. Particularly during busy periods, which every company has, employees can lose motivation and develop a sense of distance between themselves and the business if they feel unappreciated.
Here are some of the key benefits of workplace recognition programmes for both employers and employees:

Makes people feel valued

Praise makes employees feel that they are a valued member of the team. No one wants to feel like they are just a number that can easily be replaced; they want to know that they are making a difference in what they do - big or small - and workplace recognition can make a considerable difference.
The Harvard Business Review conducted a series of studies on workplace morale. One of them focused on the impact of letters of appreciation. The letters consisted of two positive sentences - one pre-selected and one personalised by the bosses that sent them. They were issued to social workers in a non-profit organisation.
The letters roughly read: “Your work has consistently had a positive impact on the children you work with” and “Your continued dedication and hard work make children and families in the region better off every day”.
A month into the study, they found that the social workers who received a letter from their managers felt significantly more valued, recognised, and supported compared to those that were not given any credit.
Additional effects included a range of personal improvements such as wellbeing, a sense of belonging, and motivation. Furthermore, a reduction in sickness absences among those who received a letter was also reported.
Communicating your team’s value can be as simple as sending a genuine letter or email, or giving positive feedback in a 1-2-1 meeting. It’s often the gesture itself that speaks volumes. More importantly, it doesn’t take much time or effort, and it can have plenty of personal benefits for your staff as well as your business.

Improves employee retention

When your workers are happy, they’re less likely to leave. Workplace recognition reminds your staff that they are performing well, that their time and efforts and appreciated, and that they belong. Not only does this boost their confidence, but it also helps improve your company’s retention rate and secure top talent.
Research conducted by the employee engagement hub, Reward Gateway, found that almost 50% of workers said they’d consider leaving an employer that didn’t praise them enough. Additionally, companies with a recognition culture have over 30% lower employee turnover.
To put this into perspective, let’s consider the financial implications of replacing an employee. It is predicted that replacing a salaried worker costs roughly 6-9 months of the position’s annual wages. That includes the new salary, recruiter fees, and training expenses - not to mention the time the recruitment process takes to find the right candidate.
For example, if you lose a full-time member of staff who makes £20,000 a year, it could cost you around £12,600 to replace them. So, maintaining a recognition culture in your company can help you promote long-term loyalty, keep talented staff, and save your company money.

Boosts motivation and productivity

Naturally, people feel more motivated when their work is recognised by their superiors. It makes them feel noticed and encourages them to perform well when they know that their bosses are paying attention and giving credit where it is due.
In evidence of this, a Deloitte study found that employee engagement, productivity, and performance are 14% higher in organisations with a specific recognition programme in place. What exactly does this mean for businesses? It means that your team is more present in their day-to-day roles, they produce optimal work quality and feel personally connected to the company and the work they do for its growth. Ultimately, workplace recognition leads to happy, driven, and productive workers.
But enhanced motivation can have extended advantages for your company, too. The Deloitte research also points out that a 15% improvement in engagement can result in a 2% increase in profit margins.
How does this happen? When employees are rewarded for their contribution, they understand how they have impacted the business and crave that sense of achievement again. This application of meaning and significance drives people to do more and in turn, your company sees the benefits of that.
So, to ensure that engagement and productivity are up, it’s important to maintain a solid recognition programme in the workplace that helps people feel appreciated and motivates them to produce their best work.

Enhances team culture

Workplace recognition reflects your overall team culture. When praise is embedded into your company values, it makes it easy for your staff to know what is expected of them, improve their skills, and continue to perform on an upward trajectory. It also gives everyone an opportunity to recognise each other and bond over celebrated success.
When it comes to expansion, a culture of motivation makes your company a forward-thinking and desirable place to work, showing new recruits that you value your workers and reward good performance.
In contrast, the absence of workplace recognition can create an outdated and impersonal feel. As a result, this could limit your recruitment potential.
A positive and inviting team culture is particularly important for your small business as it grows and changes. It can make all the difference when it comes to standing out from your competitors, attracting new talent, and keeping your existing team connected.

It improves employee wellbeing

Another important benefit of workplace recognition is that it helps improve your employee’s health and wellbeing.
It’s common for businesses of all sizes to experience stressful periods. But small companies and start-ups require more work and attention for it to flourish. Especially when your team is small and the workload high, people can feel extensive burnout and stress, leading to time off work.
This is reflected in today’s labour culture, where the average worker now takes almost 8 days off work due to poor health. Some of the main causes of this are stress and mental ill-health.
One way to reduce these common absence causes is to practice recognition in the workplace. Firstly, praise is scientifically proven to improve our ability to deal with stress and anxiety. An article on The Neuroscience of Gratitude and Effects on the Brain explains that gratitude increases our positive emotions, like happiness. Not only does this help release our stress hormones, but it also makes us more resilient against future stress.
The tricky part is that we are naturally less likely to express gratitude when we’re stressed or overwhelmed. So, when your company is going through a difficult time or you’re having problems in your personal life, it’s easy to overlook the importance of recognition.
But without this, your team could be feeling like they’re merely grinding through the day without a purpose, thus leading to burnout. In turn, this could reflect poorly on their productivity, work quality, and ultimately, your business.

Workplace recognition solutions

Being thankful for your team’s hard work doesn’t have to be a formal process - it can be, but it can also be a series of simple gestures. Here are some of our suggestions for introducing or strengthening your company’s recognition procedures:

1-2-1 meetings with co-workers

Appraisals don’t always have to come from members of management; they can be just as useful when peers recognise each other’s strengths and assist one another with overcoming their weaknesses.
One option is to implement regular 1-2-1 meetings between co-workers. Assign a fellow mentor to each employee and ask them to meet once a month, for instance. They can use this time to discuss what’s going well and what requires improvement.
Each mentor should make the effort to contribute positive feedback - personal or professional - listen to any issues or difficulties that their colleague may be experiencing and offer support where possible.

Annual appraisals

Regular performance appraisals are an incredibly useful and concise way to recognise your employees’ skills and improvements. It’s also a good opportunity to offer constructive feedback, set objectives, and reward hard work.
Appraisals typically take place every year and can include a salary review, which you could utilise as a reward system for those that achieve or exceed their targets. You could also opt for discretionary bonuses, retail vouchers, or other types of rewards that your staff may find beneficial.
However, as we mentioned earlier in the article, acknowledgment alone is a powerful gesture that is a key driver of great work. So, you could simply let your team members know that they're doing well! Feedback should be personal, specific, and relevant.

Staff awards

A popular option that many companies include in their regular celebrations is staff awards. These often take place at the end of the year, for example at your office Christmas party, or on a more frequent basis.
The key difference with staff awards is that they are a public form of recognition. They let other managers and workers know that people’s efforts are noticed, and their skills and achievements are shared with the whole company. This is a useful way of simply letting people know that they’re doing a good job as well as improving their prospects for internal promotions and departmental movements.
Again, staff awards can be kept simple and efficient. For example, you could send a monthly email to announce the employee of the month and the reasons they’ve been selected. Alternatively, you could have more fun with it by hosting a dedicated event and acknowledging the winners with a certificate, voucher, or small trophy.
Finally, why not ask staff to vote for the winner? When making a nomination, everyone should include a reason for their selection. When the awards are presented, you can share positive comments from other co-workers.
Combining public recognition with positive and thoughtful comments from peers and/or managers is an excellent way to notice talent and make your staff feel genuinely valued.
Whether you’re looking for your first recognition model or you already have one in place, but it requires refining, remember to be enthusiastic and get your team involved. Also, plan your approach thoroughly so that everyone is on the same page, knows what to expect, and how it works. Finally, individual praise should be fair, personal, and meaningful, and delivered consistently.


As your company expands and you secure the right talent, it’s important to recognise the work that your staff puts into taking your business from strength to strength. Helping your team feel valued for their hard work and personal development can have significant advantages for their overall health and job satisfaction, and your business will reap the benefits of retained staff and a happy, motivated workforce.
1st Formations is a top-rated company formation agent in the UK. Their comprehensive range of company formation packages spans a range of budgets and services to suit your needs and get your limited company off the ground. They also offer several post-incorporation services to help look after your administrative tasks, leaving you to take care of growing your new business.
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