Recent studies that show a high correlation between recognition and improved employee engagement, which in turn improves job performance and captures business value.

Employee recognition programs, when used as part of a "Total Rewards" package, can dramatically improve employee engagement and job performance, as well as positively impact business results, according to research announced today at the Motivation Show by the Human Capital Institute, the Forum for People Performance Management and Measurement, and the Incentive Research Foundation.

"This comprehensive report synthesizes recent research by analyzing case studies of successful recognition programs and recommending further investigation into workplace recognition," said Forum Vice President Beth Schelske of the ITAGroup, Inc.

Although compensation and benefits are traditional ways employers retain and motivate workers, a "Total Rewards" package may include other incentives such as work-life improvements and recognition, which meet an individual's psychological need for appreciation. Recognition, ranging from simple praise to awards, cash or extra time off, is awarded to the employee immediately after the action and without achievement expectations.

Recent studies that show a high correlation between recognition and improved employee engagement, which in turn improves job performance and captures business value. Organizations that actively improve employee engagement through recognition financially outperform their competitors.

The report's highlighted case studies of restructured recognition programs at Scotiabank, Delta Airlines and MGM Grand demonstrate that recognition programs:

1. Must include multiple award forms to satisfy different worker needs.
2. Need not be costly and, in fact, may have no real monetary value.
3. Are effective when the recognition is of value to the individual worker, and is awarded for behaviors linked to specific job performance goals.

"Companies often focus on compensation and bonuses as the means to motivate employees," said Schelske. "But, especially in our recessionary economy, recognition programs are a proven, low-cost method for creating improved productivity in organizations."

Researchers Recommend 'Best Principles,' Additional Exploration

The researchers recommend "best principles" for developing and implementing recognition programs to heighten employee engagement, improve job performance and increase business value.

1. Use both formal and informal recognition to build a "culture of recognition."
2. Provide a wide variety of recognition rewards -- to appeal to individual preferences.
3. Emphasize recognition of increased quality in performance, instead of simply quantity of effort.
4. Recognize workers regularly -- sporadic recognition may be worse than no recognition.
5. Link reward activities to specific business objectives and/or cultural values.
6. Measure the cost of the recognition reward system and the benefits gained.

"Without question, this new research points to the critical importance and measurable impact of employee recognition, especially when it comes to improving the bottom line," said Rodger D. Stotz, Chief Research Officer of the Incentive Research Foundation. "Yet there is still continued work to be done to fully explore and understand these links, and to be able to quantify recognition programs' business value to organizational leadership."