3 Golden rules for employee recognition

The right way to do employee recognition

There are 3 Golden rules for employee recognition and congratulating your employees on a job well done.

And if you do it right, it can make your company rich.

Just ask Quintiles.

Quintiles, a Fortune 500 company and the world’s largest provider of biopharmaceutical services, recently reduced turnover by 50 per cent, which saved the company millions of dollars. How?

They did a better job of telling their employees “good job.”

Specifically, they made employee recognition a focus of their organisation in the hopes of increasing morale and reducing turnover.

They made a budget of approximately $100 per employee per year to spend on recognition, and it paid off in a big way.

Despite having a budget, they didn’t really use cash rewards to aid in employee recognition.

Instead, they used intranet postings, newsletters and encouraged managers to give “shout outs” to their employees regularly, all of which equalled fewer people (and institutional knowledge) leaving and a generally better place to work.

That said, employee recognition is like anything – there is a right way and a wrong way to do it.

How do you do it well?

Follow these three golden rules for employee recognition

1. Encourage effort, not skill

The most important rule of all. When someone does a great job on a presentation, for example, the natural reaction is to say “that person is a great public speaker.”

But that’s the exact wrong thing to say.

There have been dozens of studies into this (granted, most were done to children, but it still applies) and what researchers have found is that when skills are complimented, the person generally begins to believe in their own hype too much.

So, in the example used above, if the employee is told they are a good public speaker, they will think – surprise, surprise – they are a good public speaker.

The net result? They will actually put less effort into their next presentation, believing they will be able to cruise through the meeting because they are naturally gifted at public speaking.

And their public speaking skill will erode.

In the example above, the correct thing to do is compliment the person’s effort. Say something like, “I know you put a lot hard work into that presentation, and it showed.”

What will result from that is the employee will associate their success to the work they put into the presentation, as opposed to some innate skill that requires no sharpening.

They will continue to work hard on presentations in the future because they believe that the work is the key to success, not their skill.

2. Recognition and money don’t mix

Quintiles was smart not to give money as part of the recognition.

Why not?

Just ask Hewlett Packard.

In the 1990s, HP tried pay-for-performance models – essentially, reward employees for good work with cash –at 13 of their business units.

All 13 had a similar experience: they loved it at first, then it got too competitive and they scrapped it within three years.

What happened was, after an initial honeymoon period, teamwork broke down, complaints went up and managers spent more time tinkering with the cash reward system than actually managing employees.

When the units finally shed the system, morale improved dramatically almost overnight.

Truly happy employees aren’t motivated solely by money, yet a cash-reward system puts all the emphasis on money, and it takes away from the satisfaction a person can derive from the job itself.

Yes, stronger employees should be rewarded at the end of the year with higher salaries, but little cash bonuses along the way make it all about the cash bonuses, instead of about just doing a great job.

3. If you are going to compliment, you must also criticise

A lot of people think employee recognition is telling employees they did a great job. But that won’t work by itself, and if that’s all employees hear, it will soon fall on deaf ears.

Instead, if you are honest with your employees, it goes a lot further. Of course, it is wise to follow the rule, “praise in public, criticize in private.”

What makes for effective criticism? First off, make sure it is constructive and about their work, not something personal (like “smile more”). And there should be a goal tied to the criticism, so the employee can work their way out of it.

For example, imagine an employee has a pattern of making factual errors in their reports, mostly because they are rushing through them.

The first step is to tell them the issue and then offer a temporary solution –say; you go over each report thoroughly with the employee before releasing them – until they can get it straightened out.

Then, complement their effort (if there is real effort) as they seek to improve their accuracy.

Finally, once they prove capable, tell them you trust them and you no longer will go over each report before they are released.

On that day, the employee is going to feel a lot of pride in that accomplishment.

Bottom line, compliments are great.

But if there is never any criticism, compliments are useless.

Instead, the best way to recognise employees is to give them an honest view of their work, not an inflated one.

Recommended further reading: 25 Ideas on how to reward employees at work

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