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Effects of Recognition in the Corporate World

According to John Knotter, author of Culture and Performance, companies that pay attention to employees enjoy exceptional increases to the bottom line when compared to companies that only pay attention to the bottom line. (Fig. 1) In this study, employee-focused organizations increased their revenue 483% over the bottom-line focused competition.

Proven Results

Source: Culture and Performance, John Knotter; Contented Cows Give Better Milk, Fresh Milk, Bill Catlette and Richard Hadden.

According to the Revenue Comparison study below, companies that reward employees make more money over a five-year time period compared to companies that do not reward employees.

Revenue Comparison

Source: Contented Cows Give Better Milk, Fresh Milk, Bill Catlette and Richard Hadden.

It is clear that recognition programs have a direct effect on the financial performance of a company. Use this information when you meet with a client. These facts prove that recognition programs pay off.

Recognition increases the bottom line, however, that is not the only benefit of a recognition program – it affects employees and customers as well!

Key Results Obtained Through Recognition

Below is a description of how recognition programs affect employees and the corporate culture!

Recognition Programs Keep Employees Engaged

Recognition increases the level of employee engagement in an organization. Recognizing an employee for a job well done illustrates exactly what he or she did that made a difference. This helps the employee know what behavior(s) to repeat in the future. Feedback like this helps employees stay engaged in their work.

Lower Turnover

As a whole, engaged workplaces have low turnover, high customer loyalty, and are more profitable. In fact, engaged employees are 50% more productive than disengaged workers! Additionally, recognition builds a stronger relationship between the manager and the employee. As this relationship grows, employees develop a loyalty to the manager and the organization.

Recognition Programs Improve Employee Performance

When employees are appreciated for their work they are more likely to repeat rewarding behavior. These employees are more engaged in their work and are more loyal to the company than disengaged employees. According to Jeffery Pfeffer of the Stanford School of Business, “Thirty percent of employees improve performance after being criticized; 90% of employees improve performance after being praised.” It is clear that employees who are praised do better work.

Higher Customer Satisfaction

Recognition makes a company profitable because recognized employees are more engaged in their work. Engaged employees perform at a higher level and give better service. As a result, customers are more satisfied and will continue to do business with the organization.

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