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Lessons Learned

8 Common Ways Companies Screw Up Employee Recognition

A subtle shift in thinking can make a big difference: Stop rewarding people and start recognizing performance.

8 Common Ways Companies Screw Up Employee Recognition
[Photo: Everett Collection via Shutterstock]

No one looks forward to their annual performance evaluation. That isn't lost on employers, either—many of which are scrapping that particular ritual.

That's probably for the best. Regular, real-time feedback can be much more effective, especially when it includes meaningful recognition of an employee's achievements alongside constructive criticism. But many organizations are still sorting out how to deliver recognition that works. Here are some of the more common mistakes companies tend to make and how to avoid them.

1. It's All (Or Mostly) About The Money

Competitive compensation matters, and recognizing exceptional performance with a bonus isn't always a bad idea. But those mechanisms can backfire if employers don't take the time to really develop relationships with team members beyond the standard, "I pay you for your time, effort, and results" model. If you reward excellent performance only with cash, you'll build a staff that works only for monetary gain. But if you want to forge a deeper commitment, you need to go beyond material rewards.

2. Too Many Contests

A competitive spirit isn't always a bad thing to foster. Contests are sometimes effective for sales teams, but they're generally counterproductive across an organization for much the same reason that doling out monetary rewards for great work only takes you so far. Over time, competitive reward programs create a cadre of disappointed non-winners, which erodes morale and engagement. A subtle shift can make a big difference: It isn't about rewarding winners (people), it's about rewarding excellence (performance).

3. Assuming You Know What Motivates Everyone

Companies spend a lot of time trying to figure out how to motivate their teams, and for good reason. But the common fallacy is to assume that all or most employees are driven by the same things. If you ask them, though, employees themselves tend to know—with a surprising degree of clarity—what motivates them the most.

After a couple of long and largely fruitless meetings where my own company's leadership team brainstormed alternatives to monetary rewards, we decided to go straight to our employees and just ask what they find motivating. It was a surprise when many answered so quickly and so confidently.

Sure, some employees were interested in cash—especially those with student loan debt or who were trying to buy a home. But others were motivated by the promise of more time off. Some wanted some form of merchandise or tickets to an experience, like a baseball game. Others just appreciated a donation to a nonprofit they care about. Almost all said they're delighted when their good work is publicly recognized by their coworkers.

4. Praise Only Comes From On High

That's one reason why top-down recognition should be doled out carefully: The bigger your staff, the greater the likelihood that a one-size-fits all approach isn't going to work. And while the old adage that "you can't please everyone" is certainly true, it helps to stop implementing programs that try to (implicitly or explicitly).

The whole point of employee recognition is to encourage initiative and creativity across your organization. Gone are the days when bosses could sit in palatial offices and dispense favors upon those deemed most worthy of and grateful for it. Put simply, top-down recognition programs are a strong indicator of a hierarchical management structure. So empower managers to take charge of recognizing great performance instead. Even if you see a zillion great things going on from the top perch, let someone else shine the spotlight.

5. Recognition Arrives Late . . .

Recognition, like beer, goes flat in a hurry. It’s best when it’s delivered quickly—like right now. Later this afternoon is okay; wait until tomorrow, and it's like a warm, flat pint that was poured yesterday and sat out on the bar overnight, sweating onto a napkin. So if you wait until that all-hands meeting to congratulate the past quarter's top performers, good luck generating any real or lasting motivation. In our experience, we've found that in a flat organizational structure, peer-to-peer recognition is particularly powerful. With a little structure, you can encourage the type of praise that's meaningful, personal, and immediate.

6. . . . And Sounds Generic

Specific commendation works better than anything more general. One of the reasons that many of us hate the annual performance review is that it trots out thin phrases like "team player." Effective recognition programs need to be based on specific rewards for specific activities and behaviors. And because most of us have a short attention span and can’t remember the details of what happened a couple of days ago, that's all the more reason to deliver concrete recognition in real time.

7. Narrowly Focused On Hard Goals

Make room for "soft" accomplishments, especially those that support the organization’s core values. The designer who stayed late on Tuesday to get a project back on schedule certainly deserves recognition, but so does the team member who suggested a way to provide healthier snacks or the person who defused a tense client meeting with stellar customer relations skills. The "results" that don't fit on a balance sheet still matter.

8. Autopilot Only

Recognition programs are harder to manage than you might think. To prevent them from becoming yet another "flavor of the month" that’s launched and forgotten, it pays to invest in a software platform that's interactive and has a social dimension, like Achievers, Recognize, or You Earned It, which my company uses, even though we're on the smaller side for the businesses it targets.

Ultimately, employee recognition is just too important to be relegated to an hourlong evaluation once a year or every six months. Companies don't just need to unlearn that habit, they also need to pick up some new ones, and avoiding these pitfalls is a good way to get started.

Abbi Whitaker is the founder and creative engine of The Abbi Agency. She is a member of the Young Entrepreneur Council (YEC), an invite-only organization comprised of the world's most promising young entrepreneurs.

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