Organizations with recognition programs that are highly effective at enabling employee engagement had 31% lower voluntary turnover rates than organizations with ineffective recognition programs
Organizations with strategic recognition programs in place exhibit 28.6% lower frustration levels than companies without recognition programs
Praise and commendation from managers was the top motivator for performance, beating out other noncash and financial incentives, for 67% of workers surveyed
Effective employee recognition helps everyone — employees are happier and more engaged, and companies can feel a boost on the bottom line. But don’t fall into the trap of implementing reward programs that don’t work or, worse, harm the company. One major example is the ever-present Employee of the Month award.
Reasons Why Employee of the Month Fails
#1: What Does It Mean Anyway?
When someone gets an Employee of the Month honor, do any employees — including the one recognized — even know why? Unfortunately, many companies don’t make the criteria for the award public. In the worst case, even managers giving the award don’t know the criteria exactly. In this way, the reward can start to move around the company, as managers think that it’s been awhile since a certain division has gotten the reward, so it goes to someone there, for example. At best, it means the reward is harmless, but at worst, it’s meaningless and arbitrary, meaning your company doesn’t need it at all.
It’s key for employees to know why they are being rewarded so all workers can strive to achieve the goal by working toward basic criteria that will help the organization. More helpful are awards based on company goals and values, which can be tied to specific behavior and performance.
#2: Employee Competition Should Not Be a Goal
An Employee of the Month award coming from upper management can foster a spirit of unhealthy competition, where workers feel pitted against their own peers for rewards. Employees will strive to be rewarded rather than perform well. And from their perch at the top of the company or team, many leaders can’t see this competition brewing until it destroys team dynamics.
#3: A Team Can’t Be Employee of the Month
In many, if not most, companies, it’s a group of individuals that achieves a goal or finds a new success, not one single person. The unhealthy competition can turn into an even bigger storm if a group of 10 employees work hard on a new project and only one of them is rewarded for it. Worse, feeling left out or overlooked can de-motivate the other team members and build up resentment against the company.
#4: Focus Turns Toward Recognition
When one Employee of the Month award is on the table, employees may turn their focus on achieving it — even though they do not know the criteria — rather than focusing on their performance and job role. Much more helpful is to have all employees focused on achieving business goals — not some monetary or nonmonetary prize. The group focus on a shared goal and company vision is muddied in favor of fixation on an arbitrary gift.
#5: Infrequency Breeds Resentment
By only having the reward 12 times a year, many, many hardworking and qualified employees can be overlooked for rewards. And constantly feeling overlooked, despite helping the company succeed day by day, is a quick way to start feeling resentful. This negative spirit and low morale can quickly infect others in a team and spread.
#6: Managers Think Recognition Is Done With the Reward
Recognition is far, far more than one Employee of the Month award 12 times a year. Managers should be fostering a culture of recognition with day-to-day things that support employees. This can be anything from a simple “thank you” to ensuring your company sponsors proper pay and benefits. There should be appreciation outings, barbecues, or even just workday lunches — but employers who focus on these strict reward programs, they can think they have done enough. More often than not, their employees won’t agree.
Why Daily Peer-to-Peer Recognition Is More Effective
These six major problems with Employee of the Month programs can all be remedied with a strategic peer-to-peer recognition program that operates on a daily basis.
According to SHRM/Globoforce:
Peer-to-peer is 35.7% more likely to have a positive impact on financial results than manager-only recognition
41% of companies that use peer-to-peer recognition have seen marked positive increases in customer satisfaction
Peer-to-peer recognition has shown to help employees, the company, and customers — a true win, win, win.
Peers can use a “comment card”-style process for recognizing their peers who have helped them, achieved a job goal, innovated a new process, or otherwise found success or showed valued behaviors. These comments can be given anonymously or not, via mobile device app, even. This makes the reward far less arbitrary than Employee of the Month.
Peers are more likely to know what’s actually going on at the front lines, and so the reward will feel less political and it is less likely to breed an unhealthy competition for manager attention.
Because peer-to-peer recognition is done on a daily basis, it will also eliminate the once-a-month strive toward a prize and instead foster a spirit of daily good performance. This way, too, entire teams can be recognized and awards can be given out as frequently as deserved. It’s a step toward building a culture of recognition within the entire company structure.
Show your employees appreciation — the right way. A positive step toward doing this is ditching the Employee of the Month program that breeds resentment in favor of a consistent, daily peer-to-peer recognition program that fosters a culture of appreciation.