Research shows that both financial and nonfinancial rewards impact the job satisfaction and motivation of employees (DeCenzo & Robbins, 2010; Haile, 2009; Severinsson & Hummelvoll, 2001). Employees are likely to be motivated to improve their performance with nonmonetary rewards such as employee recognition. Recognition is the acknowledgement, appreciation, or approval of the positive accomplishments or behaviors of an individual or team (Caligiuri et al., 2010; Nelson, 2005; University of Iowa, 2009). According to Gostick and Elton (2007), recognition refers to praise or a personal note acknowledging achievements including small gestures that are important to employees. 

Why Should We Recognize Employees?  

One valuable outcome and reason for recognizing employees is that studies show that people who feel appreciated are more positive about themselves and their ability to contribute, i.e., employee recognition can boost productivity and increase satisfaction (Daniels, 1999; Darling et al., 1997; Nelson, 2005; Gostick & Elton, 2007). A number of research studies indicate that nonfinancial rewards such as recognition and other intrinsic rewards are sine qua non for job satisfaction (Darling et al., 1997; Nelson, 2005). Based on a survey of 200,000 employees, Gostick and Elton (2007) conclude that if employee recognition is conducted properly, it can increase profitability and customer service levels, and heighten employee engagement and satisfaction. Nelson (2005) concludes that recognition leads to improved communication (employees are more likely to offer solutions and new ideas), better cooperation (employees are more likely to offer to help and go the “extra mile”), and decreased absenteeism and turnover (employees will demonstrate higher job satisfaction and loyalty). Daniels (1999) concludes that quality and productivity are enhanced when supervisors simply increased their daily frequency of contingent positive reinforcement. Employees benefits from positive reinforcement and recognition from peers and/or management. Recognition can motivate, helping to build feelings of confidence and satisfaction (Keller, 1999) and inspire loyalty and commitment, as well as encouraging employees to extend their efforts (Robbins & Judge, 2008). Darling et al., (1997) argues that one of the most effective morale boosters is praise for a job well done. She further surmises that regularly recognizing and rewarding employees can be one of the easiest ways to keep employees satisfied and productive. For many individuals, feelings of self-worth are directly associated with their work. 

Recognition is an important tool for managers, business owners and HR professionals in promoting employee motivation and organizational success. Allen and Helms’ (2002) research confirmed the importance of regular expressions of appreciation by managers and leaders to encourage behavior of employees to reach strategic goals. Despite the important role of recognition in motivating employees, only about 40 percent of North American workers say they receive recognition for a job well done or get recognized for outstanding individual performance. All too often, simple nonmonetary types of rewards are overlooked and underutilized by managers (Kouzes & Posner, 2003). In one study, only about 50 percent of managers say they provide recognition for high-performance (Kepner-Tregoe quoted by Kouzes & Posner, 2003). While recognition is not widespread, Nelson’s (2005) study shows that 78 percent of employees indicate that it is very important for them to be recognized by their manager, and 84 percent of managers concluded that providing nonmonetary recognition as a reward has increased performance. Further, 91 percent of managers conclude that recognizing employees helps motivate them. 

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