In a competitive business climate, more business owners are looking at improvements in quality while reducing costs. Meanwhile, a strong economy has resulted in a tight job market. So while small businesses need to get more from their employees, their employees are looking for more out of them. Employee reward and recognition programs are one method of motivating employees to change work habits and key behaviors to benefit a small business.


Although these terms are often used interchangeably, reward and recognition systems should be considered separately. Employee reward systems refer to programs set up by a company to reward performance and motivate employees on individual and/or group levels. They are normally considered separate from salary but may be monetary in nature or otherwise have a cost to the company. While previously considered the domain of large companies, small businesses have also begun employing them as a tool to lure top employees in a competitive job market as well as to increase employee performance.

As noted, although employee recognition programs are often combined with reward programs they retain a different purpose altogether. They are intended to provide a psychological—reward a financial—benefit. Although many elements of designing and maintaining reward and recognition systems are the same, it is useful to keep this difference in mind, especially for small business owners interested in motivating staffs while keeping costs low.

A well-established concept, R&R is widely accepted as an important engagement tool. What may still be lesser known, is the fact that it is easy to implement a basic system for rewards and recognition and keep on improving it to align it with the company values. Despite its ease of implementation and very low cost, it does require constant involvement from HR to onboard the employees on the culture of recognition till it starts getting the desired momentum, after which it keeps moving on inertia, with a few nudges here and there.

Recognition-rich cultures are the need of the hour. Engagement levels in companies are abysmally low affecting various aspects of the organization. Companies that scored in the top 20 per cent for building a ‘recognition-rich culture’ actually had 31 per cent lower voluntary turnover rates! This is a huge statistic. A report from Bersin by Deloitte says that most CEOs will pay millions of dollars to reduce voluntary turnover (this is when good people leave on their own).

Employee expectations in terms of R&R have gone through a lot of change progressively:

  • Expectation of good designation towards the fag end of one’s career
  • Recognition of their tenure through the use of service awards
  • Recognition of star performers, selected at the highest level, at annual functions
  • Getting products and gift cards as appreciation for performance at department levels
  • Real-time recognition for any out-of-the way effort given at the peer level

HR knows the importance of recognition, but some of the main reasons behind the gap between knowing and doing are as follows:

  • Starting trouble
  • Lack of awareness about tools/platforms which can help with this
  • High cost of available tools/platforms
  • Inability of existing tools/platforms to satisfy the needs of the modern work force
  • Absence of continuous support from vendors to make the programme a success

The most important part in designing a rewards and recognition programme is to decide what values the organization wants to recognize and then create convenient ways for employees to promote these values*

Thankfully, with new-age tools and business models, these concerns are getting addressed. That said, the most important part in designing a rewards and recognition programme is to decide what values the organization wants to recognize and then create convenient ways for employees to promote these values. Once this is decided, it is more of a process that needs to be followed to get the best out of it. Here’s a simple example. Though a simplistic view, companies can get started using this as the base. And of course, it is a continuous journey with regular tweaks to the programmes based on the feedback.

Step 1 – Let’s assume the value you wish to promote within the company is, ‘Going the extra mile.’

Step 2 – Clearly define what ‘going the extra mile’ means. Please note, this will mean different things in different contexts, groups and seniority levels. For example, the VP-sales are expected to help out his team to close deals. While that is part of the job, let’s say the salesperson had to take an emergency leave and could not call/meet an early-stage lead. If the VP takes up that call himself, he would have then ‘gone the extra mile’. Now imagine an engineering team member helping a different engineering group with an issue. That is also a case of ‘going the extra mile.’

Step 3 – Define how employees will recognize this value (‘Going the extra mile’). Today, you have tools on both the mobile and the Web, which allow employees to identify these values. HR can define certain awards/badges/certificates, which can be given to employees using these tools. The organization can also decide to attach monetary values to these awards (maybe managers can attach monetary value but team members cannot—the tools are flexible).

Step 4 – HR needs to select the right tools to promote these ‘recognitions’. Again, these tools allow for very smooth and easy ways to propagate these. Nowadays, employees prefer mobile tools, such as Facebook, LinkedIn, and so on which have great usability and virility built in. Thankfully, the new-age HR tools have learned a lot from these consumer products and employees no longer have to deal with old enterprise software modules. This also helps in the uptake of these products.

Step 5 – Launch and re-iterate on a regular basis. This sounds simple but is the most difficult part. Things will not always go according to plan, but HR has to take ownership and continuously tweak the product and improve the numbers. This is also the reason you need to work with vendors, who are flexible and adapt to your needs. Some of these vendors can work as an extended arm of your HR R&R team.