Robust employee reward and recognition programs have always been crucial for attracting, retaining, and supporting high-quality talent and employee performance, but never more so than in wake of COVID-19-incited labour upheavals.
The latest Gallup report shows only 36% of employees are engaged at work, and a new study from BCG cites rewards and recognition as the #1 workplace factor impacting workforce engagement.
While it is obvious that companies must improve the quality of their employee reward and recognition systems to keep and support their talent, doing so isn’t as simple as it may seem.
Evolution of Employee Recognition Over the Past Several Years
The very concept of employee recognition has evolved significantly over the past several years. Today, it is not just about providing the right benefits and rewards to the employees for their good work.
Rather it is more focused on enhancing the overall employee experience and their well-being at the workplace. Now, recognition is about acknowledging the individuality of the employees and helping positively redefine their relationship with work and its impact on their life.
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Employees today view recognition as much more than getting a better work-life balance, enhanced job security, increased pay, and benefits, or even value alignment. They are questioning the very fundamentals of the organizations they work for and are redefining the importance of work in their lives.
This has led them to seek more human-centric employee reward and recognition programs that will help them to thrive and survive in today’s volatile business environments.
Key Trends for Employee Reward and Recognition to Look Out For in 2023
The reward and recognition trends in 2023 are likely to be influenced by the ongoing pandemic and its impact on the workforce. Companies are likely to focus on employee engagement, with reward and recognition strategies designed to align employee interests and motivations with company goals. Here are some of the trends that might emerge:
- Data-driven decision making: Companies are likely to use data and analytics to inform their compensation decisions, allowing them to make more informed and equitable decisions.
- Virtual / Social media recognition: With remote work becoming the norm, virtual recognition is likely to become more popular. Companies are likely to adopt virtual / social media platforms such as LinkedIn, Twitter, and Facebook and tools to celebrate employee achievements and milestones.
- Flexible benefits: Employees are likely to value flexible benefits that can be customized to meet their individual needs. This could include things like paid time off, wellness programs, and education and training opportunities.
- Well-being focus: Making wellness an integral part of the recognition policy is key towards enhancing the happiness and satisfaction level of the employees. Employee well-being is likely to become an even greater priority, with companies offering programs and initiatives to support physical and mental health.
- Financial wellness: Companies are likely to focus more on financial wellness, with benefits such as financial planning services and student loan repayment assistance.
- Sustainability: Companies are likely to focus more on sustainable practices and environmentally friendly rewards and recognition programs. This could include things like eco-friendly gifts, carbon offsets, and volunteer opportunities.
- Personalized recognition: Different individuals are motivated by different rewards; there is simply no getting around it. Ignoring the diversity of the workforce is a sure path to low engagement and productivity. Personalized recognition is likely to become more important, with companies using data and insights to tailor rewards and recognition to individual employees.
- Focus on diversity, equity, and inclusion: Organizations need to offer to eliminate any bias in providing professional growth opportunities as a way of recognizing employees. Companies are likely to continue their focus on diversity, equity, and inclusion, with rewards and recognition programs designed to support and recognize underrepresented groups.
- Gamification: The most recent Gallup workplace survey shows that employees need constant feedback to know if what they are doing matters.
Ongoing management challenges include understanding how each person prefers to be recognized, making recognition objective and real by basing it on performance, and recognizing employees frequently.
These challenges are exacerbated by high turnover, a documented consequence of insufficient recognition, in a self-perpetuating cycle reaching unprecedented peaks in the era of the Great Resignation.
These challenges are solved by performance enablement technology which automates high-engagement, gamified, high-frequency recognition. One crucial distinction between data-driven recognition and the blanket approaches of yesteryear is the degree of meaningfulness to the employees.
Most existing reward and recognition programs say nothing in particular about any individual’s contribution. A gamified approach to employee recognition takes it out of the realm of bureaucratic lip service and into the process of real-time learning and progress. Gamified, high-frequency recognition improves engagement not only by increasing the meaningfulness of recognition, but also by decreasing uncertainty by tying recognition to discrete, personalized goals.
Elements like friendly leader boards further increase engagement by strengthening the social culture of a workforce, while incremental rewards like prizes and gift cards keep the momentum up. Engaged employees make engaged teams.
Millennials already form the largest section of the workforce. They will soon form half of the workforce in the next one year and three fourth by 2030. And they will be followed by Gen Zers (who will be even harder to impress and retain!) A watch on 10 years of tenure or a turkey on holiday season won’t work anymore.
The employee experience is about to shift due to economic pressures and a probable recession in many countries. Yet demand for skills remains high, as businesses continue to transform products and services. This means creating a positive working culture that attracts and retains talent is vital to financial success. Companies will need to evaluate their own unique circumstances and the needs of their employees to determine which recognition programs will be most effective.