Why reward and recognition will be more important than ever in 2023

Now, that’s a bit of an extreme example, but the point still remains. People want to be appreciated. They want to feel like their work matters. And HR departments across the globe know this, which is why it’s generally near the top of their agenda.

But this year, we reckon it’ll take on even more importance — and here are a few reasons why!

It’ll help you with the productivity puzzle

Every employer is looking for ways to be more productive, especially with the tough economic backdrop we’re facing. One of the best ways is to look at what motivates people to go that extra mile.

Some of you may be familiar with the Two Factor Theory, put forward by a US psychologist called Frederick Herzberg. In a nutshell, Herzberg spoke about how things like salary and working environment were hygiene factors — they wouldn’t motivate people or promote job satisfaction, but a lack of them would cause dissatisfaction.

What businesses need to focus on are growth factors (or motivators). Examples include career advancement, achievements and recognition.

By rewarding and recognising on a frequent basis, you can build a culture of appreciation that spreads throughout the company. This then motivates people to do more, and to perform better.

It’s not just about completing projects or hitting sales targets either. For example, you may have employees that really live up to your values. Rewarding them for this doesn’t just boost their morale — it shows everybody else what behaviours you're looking for, meaning they’re more likely to replicate it.

It’ll boost employee wellbeing

Having a strong culture of appreciation isn’t just good for the bottom line — it’s also good for your employees’ wellbeing. You’ve probably read a ton of articles in recent years about how important this is (a fair few on this website!), but remember that employee wellbeing isn’t just about being reactive. It’s about getting ahead of the game and finding ways to actively improve people’s health. When it comes to mental health, rewarding and recognising people can have a really positive impact.

And guess what? This ends up having a positive impact on the bottom line as well. Did you know that the number of US Google searches for excuses to miss work increased by 630% from 2018 to 2022? Or that poor mental health costs the global economy over $1 trillion from absenteeism and reduced productivity?

So clearly, what’s good for your people’s health is also good for you. Showing appreciation and giving them more than just a salary will do wonders for their state of mind, and make them want to keep coming into work.

It can create memorable moments

Your employees will know roughly how much they’re getting paid at the end of the month. And that’s pretty much where the connection to you stops.

While we all need a healthy wage (like we said in the first point, it’s a hygiene factor) — this doesn’t create any memories for people that they can link to you.

Think of it this way. An employee won’t pay their mortgage or electricity bill and tell people: “My employer helped me do that.”

Or let’s say they treat themselves to something like a holiday. They're probably unlikely to go on social media and post: “Thank you to my employer for paying me my salary and allowing me to go on this holiday!”?

A reward on the other hand, allows them to create a memory which they can directly connect to their employer. It might be a trophy or certificate that they’ll show off to family and friends. It might be a winners dinner you treated them to.

Whatever the reward is, the employee will immediately link it with you — and this is a great way of increasing loyalty.

It can help with the cost of living

We mentioned the tough economic times earlier, and people are of course looking for ways to get more money in their pocket. Something we’ve noticed at Perkbox is how our clients use Reward points to help their employees financially. These points can be spent on whatever the individual wants, and many are choosing to use it on essentials, such as a gift card that can be spent on grocery shopping.

This leads to a wider point about the cost of living crisis. While businesses want to help their people financially, it’s also important to empower them. In other words, let them take control of their personal situation. It can be tempting to give them a specific voucher to a specific grocery store — but what if they don’t shop there? What if they’re fine with groceries but actually need help getting cheaper wi-fi?

By giving employees choice, you can guarantee they’ll find the reward meaningful to their individual lifestyle. Plus, that feeling of empowerment is great for morale, and therefore great for employee retention.

Which leads us neatly onto our last point…

It’ll boost retention

The last thing businesses want this year is for valuable people to leave. The cost of replacing them (which some studies say can be six to nine months of their salary) is something many won’t have budgeted for. You want your recruitment costs to be spent on bringing in more talented people, not replacing the ones you already have.

But by showing employees you value what they bring to the table, they’ll feel more invested in and passionate about what they do — increasing your chances of retaining them. Research suggests that 59% of employees prefer jobs with a rich recognition culture, compared to jobs with higher salaries that don’t give any recognition.

There’s lots of things you can do to build this into your company. Many businesses have some sort of social recognition platform, but you can also simplify things. Things like end of week shoutouts are a great option. They should involve both senior leaders recognising their teams, as well as peers being able to recognise each other.

The key takeaway

With all the external pressures businesses and employees are facing this year, you need to focus on the most important tools in your employee engagement toolkit. Reward and recognition definitely fall into this category — get this part of your strategy right, and 2023 can be a roaring success for you.