What are you doing to keep your employees happy? 

The typical answer from people & culture leaders to this question is, “We offer competitive salaries, great 401(k) plans, generous stock options, L&D budgets, and WFH allowances, in addition to other perks and benefits!” 

While all that’s great, can happiness, something that’s believed to come from within ourselves, be driven by monetary benefits only?

There’s something else that can boost your employees’ happiness by leaps and bounds—something that requires zero investment on your part unlike all the other things mentioned above. Showing appreciation. 

This might sound underwhelming, but that’s only till you find out how much people actually value recognition over monetary rewards. Employee motivation firm MakeTheirDay and gamification company Badgeville, funded a study to find out the relationship between motivation, money, and recognition. Their research found that 83% of employees reported that recognition for their contributions was more fulfilling than any other form of rewards or gifts. 70% of the survey respondents even said that their most meaningful recognition “had no dollar value”!

Why do people crave appreciation so much?

Recognition and praise initiate a dopamine hit in the human brain—it activates the reward centers in the brain, giving you a rush of positive emotions like happiness, satisfaction, and motivation. This release of dopamine creates a feedback loop, where the person experiences positive feelings, which in turn, encourages them to continue performing at a high level and to seek out more opportunities for recognition and praise.

Showing people that their hard work and achievements are valued through praise and recognition can tremendously increase their sense of self-worth. This quickly translates to a boost in their morale and motivation. 

You don’t need to submit an exhaustive list of reasons to make someone feel appreciated or valued. Often, it’s something really simple, something personal, yet something that means a lot—as teamwork and leadership expert Mike Robbins explains in his TEDx talk:

Praise and recognition isn’t merely a means to higher job satisfaction and engagement but also a pathway to a positive work culture that strengthens relationships among coworkers. A study by the American Psychological Association found that employees who feel appreciated and valued by their managers are more likely to have positive relationships with them and view them as more effective leaders.

A severely underutilized silver bullet

Recognition is a powerful tool that can inspire people to go the extra mile. The vast majority of employees—a staggering 79%—report that recognition fuels their drive to work harder. A Gallup and Workhuman report found that employees who are regularly recognized for their contributions are:

• 5x as likely to see a path to grow in the same organization
• 44% more likely to be “thriving” in their life overall
• 73% less likely to “always” or “very often” feel burned out
• 4x as likely to be actively engaged at work
• 5x as likely to feel connected to their workplace culture

Clearly, recognition is a knight in shining armor for your people strategy. 

However, despite its fascinating benefits, Gallup found that very few are actually receiving the recognition they deserve. So why is everyone sleeping on this?

Part of the problem may be how managers approach praise and recognition. In a survey conducted by the Harvard Business Review, 44% of managers agreed that giving criticism was stressful or difficult, and 21% admitted that they, in fact, avoid it.

Why could this be? 

There is a hoard of plausible factors that may cause this. Some of them may point to the manager’s lack of communication skills or personal ideologies. However, the majority stem from misconceptions about praise and recognition—such as the fear of seeming insincere or causing jealousy among team members or even the idea that praise is simply unnecessary as long as their team members are “well-compensated”. 

"Managers seem to operate under a self-reference system; they rank rewards as they would want them for themselves and assume that their employees would subscribe to the same rewards."
‍— Excerpt from the Business Horizons article ‘What Motivates Employees’ by Kenneth A. Kovach

So let’s clear up those misconceptions, understand the intricacies of praise and recognition, their differences, and how they can effectively drive high performance among your people.

The Nuances of Praise & Recognition

The terms ‘praise’ and ‘recognition’ are often used interchangeably—and understandably so. Praise and recognition are both forms of positive reinforcement that aim to build a better workplace culture. However, they differ in their purpose and delivery.

Praise refers to the act of expressing admiration, approval, or commendation for someone's actions or qualities. It is often more personal and informal in nature and can be in the form of verbal comments, written notes, or gestures. Praise can be given by anyone—coworkers, supervisors, and managers.

For example, “Your ideas are truly remarkable and inspiring. We are incredibly fortunate to have you on board with us and we truly value your creative genius.”

Recognition, on the other hand, is a more formal way of acknowledging and rewarding an individual for their achievements, performance, or contributions to the organization. Recognition may also include bonuses, awards, certificates, public acknowledgment, or opportunities for professional development.

An example of a recognition statement can be, “We really appreciate your hard work and commitment to this project, Sonia. Your dedication and attention to detail have been detrimental in getting this project shipped.”

In a nutshell, praise goes beyond recognition—it is a more personal, specific form of recognition that goes over and above work or OKR-based achievements.

The Specific Roles of Praise & Recognition in Driving Employee Satisfaction

Praise and recognition play different but complementary roles in boosting employee happiness.

The role of praise is to provide instant feedback and validation for a person’s actions or qualities. Praise helps people feel appreciated and valued for their contributions. It improves their confidence and sense of self-worth. When a person receives praise, it helps them understand that their efforts are noticed and personally appreciated, which leads to an immediate boost in happiness and satisfaction.

The role of recognition is to reward and acknowledge the professional achievements and contributions of a person. Recognition serves as a tangible reminder of their accomplishments and can have a more lasting impact on their happiness and motivation. When someone receives recognition for their hard work, it sends a clear message that their efforts are not only acknowledged but also valued by the organization, and that they are making a meaningful impact.

"Well Done" Works For Steaks, But Not For People

Research has shown that providing specific, meaningful praise is more effective than generic praise. According to a study by psychologist Dr. Carol Dweck, when people receive specific recognition for their efforts and achievements, they feel more valued and are more likely to continue their good work.

If you’re wondering, “Why should I go with mindfully-chosen, meaningful words when all forms of praise and appreciation are generally “nice” anyway?”, there’s a reason. 

Specificity helps employees understand the impact of their work and the value they bring to the organization. It also shows that the person providing the recognition took the time to specifically acknowledge the individual’s contributions and achievements instead of looking at praising someone as an obligation. They are more likely to feel appreciated this way than by a half-hearted phrase like “Nice work”.

Additionally, specific recognition makes it clear to the employee exactly what they did well and why they are being recognized. Instead of a plain “Great job, Nathan!”,  a more personal “The attention to detail in your presentation is incredible, Nathan” gives Nathan the necessary clarity as to what part of his contribution exactly is being commended, leading him to repeat that behavior and strive for continued recognition.

Specificity, however, is only one of the many things you need to keep in mind when it comes to praise and recognition. To help you remember better, we’ve compiled a list of do’s and don’ts with examples for clarity.

Building a Culture of Praise

We spoke about why people yearn for appreciation and what organizations can do to give them the recognition they need. But at the end of the day, recognition boils down to culture. Chances are if you already have a great workplace culture, you also have a culture of recognition. However, it’s how this system of recognition works within your organization that determines the effectiveness of your people strategy.

Building a culture of praise is all about fostering a positive, supportive, and empowering environment that prioritizes employee well-being and growth over everything else. By incorporating a consistent and meaningful approach to praise and recognition, organizations can create a workplace where people feel they are genuinely appreciated for their value and come close to finding a piece of that happiness within themselves.