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Ensuring employees are rewarded and recognized is the first link in the chain that results in satisfied customers and overall wellbeing for the firm. Christi L. Gibson, Executive Director at the National Association for Employee Recognition, spoke to HR Management about the significance of recognition programs, which companies are implementing the best schemes and future trends.

HRM. Why is employee recognition so important?

CG. Research conducted by Northwestern University reveals that there is a direct link between employee and customer satisfaction, and between customer satisfaction and financial gain. It’s been proved that a strong recognition program directly aligned with the company’s goals will result in the firm making more money.

Management teams have learned through experience that consistent use of recognition, reward and praise throughout an organization is instrumental in reducing turnover, increasing productivity and producing a positive working environment. A paycheck on its own is not reward enough for employees. A paycheck will reassure an employee that they have done a good job, but if they are noticed and recognized for doing an exceptional job they will embrace the company’s goals and values, and work above their standard. This will also lead to them taking fewer sick days, and they will put in an extra effort for the company. The result will be a loyal employee.

Besides retaining employees, recognition also elevates customer service and sales. It can also lead to the company being recognized for its recognition practices, which will attract a better recruiting pool. If you consider Fortune’s 100 top companies to work for and compare that with Forbes’ best-managed companies, then you will see that many of these are one and the same.

HRM. What are some of the best schemes implemented by organizations? What makes them so effective?

CG. Companies have various methods. The basic programs involve day-to-day recognition, which involve things such as electronic thank-you cards, or praise from a member of the upper management. You can’t let people’s good work go unnoticed – for instance, if someone develops a program that saves your company thousands of dollars and you don’t recognize them for six months, the scheme is useless. They need to be recognized straight away.

Our 2006 NAER Best Practice overall recognition winner was the Westfield Group. They did things like electronic thank you cards – these were available to employees to send throughout the Westfield Excellence Recognition program and each card was designed to reinforce their specific core competencies. Therefore, the employees who got recognized understood how their actions contributed to the organization’s mission. Other day-to-day recognition activities include luncheons, and they also had a national smile and volunteer week. The company recognized and honored both the professional and personal passions and accomplishments of its employees.

On a more informal basis, the company put together a military activation program. With this, the company sent a gift basket to the family and a care package was sent directly to military personnel. When they came back from their military assignment, the President of the company was notified and would send them a personal note. They also had a ‘Success Fest’, which was an Annual Employee Recognition Event to showcase the accomplishments of individual departments. This was very much a carnival setting. Many of the departments posted booths in the carnival to highlight their accomplishments. They would be able to show the rest of the company what they had done.

The company’s formalized recognition process included a performance program, which centered on recognizing specific behavior that exemplified the customer’s five core competencies. These included customer focus, integrity and trust, interpersonal savvy, perseverance and self-development. Another formal recognition program they had was length of service recognition. With this, employees were recognized at different stages of their career with a choice of several awards that included the Westfield Group logo. Some of the awards have become so coveted that they become a status symbol amongst the employees.

HRM. Can you outline some of the shortcomings of employee recognition and incentive schemes?

CG. If you do it wrong and don’t have a program that is aligned, measured and set then you might as well throw your money out of the window. If you are not implementing practices to recognize the behaviors that you want your company to continue to do to become successful, then it is worthless. It won’t mean anything to your employees. If you give something to everybody then it won’t mean anything.

Without a strong recognition program, you might look good on the outside, but in the inside you will be deteriorating. It’s like looking at a tree with a hollow inside – it looks good on the outside until it falls down.

HRM. In general, how do US organizations rate when it comes to encouraging and supporting their employees?

CG. NAER conducts a survey every year-and-a-half to find out what is going on with recognition programs around the United States. In the 2005 survey, 92 percent of organizations said that recognition is more prevalent within their company today versus the year before. 60 percent of recognition programs have a written program strategy. 81 percent said it created a positive working environment and it is the most common goal of most organizations.

NAER has also developed a Certified Recognition Professional (CRP) designation program. This provides a means for recognition professionals to achieve the needed skills and knowledge to be successful. It sets a standard for assessment and abilities, and clarifications for future expectations. It also provides organizations with performance standards and a means to identify the individual to meet those standards. So when a CEO of an organization is hiring someone to implement a recognition program, they will want to hire someone that has a CRP because they will have the skill, knowledge and know-how to do this correctly.

To earn a CRP designation, candidates will complete four facilitator-led courses and pass the required testing. The NAER Certified Recognition Professional program sets the standard for assessment of individuals’ abilities and provides a means for recognition professionals to acquire the needed skills and knowledge in order to excel.

HRM. What trends do you foresee in the future?

CG. In a 2006 NAER member survey we found 72 percent of NAER’s member companies commitment to recognition programs is increasing, Employee performance is the key to success for any organization. We know, based on extensive academic, scientific and business research, that employee performance is enhanced by systematic employee recognition, defined as: “An after-the-fact display of appreciation or acknowledgment of an individual’s or team’s desired behavior, effort or business result that supports the organization’s goals and values.”