Employee Retention Employee Recognition

How to Recognize Your Employees on a Budget


Money can't buy happiness, but recognition can!

We all know the perks of employee recognition: happier employees. Lower turnover rates. Higher engagement and performance. Better Glassdoor ratings. 

But how do you make room in your budget for recognition with so many competing priorities? From acquiring talent to developing new business strategies, to digitalizing operations, it can be difficult to imagine where recognition might come into play. 

According to HR Tech News, 35% of HR leaders say their companies do not have adequate talent to drive their digital business transformation. Increasing employee engagement helps you retain your top talent, and attract team players who will help your company succeed both online and offline. 

Since managers account for at least 70% of the variance in levels of employee engagement, you’ll want to equip them with the best tools possible -- as soon as possible! 

Employee recognition is not one-size-fits-all. To produce high performing Teams, you’ll first need to determine what kind of program your company would benefit from the most. 

Keep reading for six actionable steps you can take right now to build the recognition program of your dreams, all without breaking the bank! 


How to Recognize Your Employees on a Budget


1. Determine Your Company’s Needs


Identify what your employees are motivated by. Do they need more recognition from managers or peers, or both? Do your Teams prefer tangible rewards or verbal affirmation? 

Traditional milestone rewards are not enough to build a recognition program that sticks. Modernizing your approach will help alleviate your workload and save valuable time and resources.

Let’s face it. There are only so many times you can receive a company mug or shot glass before the gift loses its impact. You don’t want to waste time and money on rewards that ultimately do nothing to motivate your employees, or worse, have the opposite effect!

Be prepared to ditch (or significantly reduce) the company merch. The most effective employee recognition is tailored to how each individual wants to be recognized. 

Whether your company wants to increase retention or create a better remote work strategy, or focus a combination of priorities, recognition that rewards the individual matters. 


2. Focus on Flexible Rewards


As we near the end of this challenging year, it is important to realize that your employees have drastically different needs. 

Some families are separated by computer screens or borders, while others are still adapting to life under the same roof. With a wide range of personal and professional hardships emerging, flexibility is key.

Instead of planning an expensive year-end company retreat, reward your employees with paid time off. This lets them know that you value their time at work, and gives them the opportunity to take up a new hobby, or have a movie marathon with their kids, or finally rearrange their home office. The gift of choice is a powerful one.

The remote work environment presents unique challenges to rewarding your employees. You probably won’t be able to treat your Team to a celebratory lunch or happy hour anytime soon, but that doesn’t mean the recognition stops there. 

Instead of a meal out, send them an Uber Eats gift card so they can enjoy their reward from home. We have no shortage of Partner Merchants to choose from if you're stuck on how to reward your employees!

Bottom line: everyone has different needs, both pre- and post-pandemic. Flexible rewards have flexible budgets.

Now, let’s crush some misconceptions about recognition programs. 


3. Bust Recognition Myths


Many companies set up employee recognition programs only for them to fall short of delivering major benefits. Why is that? 

Misconception #1: Money is the greatest motivator. 

According to Gallup research, the most successful forms of recognition are at low or even no cost to your company. When asked which types of recognition were the most memorable to them, employees answered with six specific methods: 

  • Public acknowledgement through awards, certificates, & verbal praise
  • Private recognition from a manager, peer, or customer
  • Positive evaluations or reviews 
  • Promotions, increase in responsibilities
  • Monetary rewards
  • Personal job satisfaction 

While monetary rewards are certainly on the list, there are plenty of ways to give meaningful recognition without them. 

Misconception #2: Competitive rewards are the most effective way to drive performance. 

Competitive reward programs may motivate the handful of employees who actually get the reward, but those who do not will likely be less engaged than before. 

‘Employee of the Month’ and other title-based rewards place a select few on a pedestal, leaving the majority of employees feeling unappreciated and undervalued. This will cost your company in loss of productivity. 

As a rule of thumb, if you feel like you have to coerce your employees to participate in competitive rewards, you may want to reconsider having them in the first place.

Misconception #3: Top-down recognition is the most impactful. 

Senior managers and directors may not always have the time to provide consistent, sincere feedback to all employees. It is important for employees to feel like they are truly part of a Team and not just a cog in a machine!

Your colleagues are the ones there to see your daily efforts and contributions to the company. Celebrate your Team’s successes through peer-to-peer recognition to boost morale and retain your talent. 

According to the Harvard Business Review, peer-to-peer recognition feels less like a performance evaluation, and more like a genuine expression of gratitude. Even a simple “thank you” at the next Team meeting goes a long way!



4. Crunch Those Numbers 


Now that we've busted some misconceptions, let's get down to the numbers.

SHRM recommends that HR departments spend at least 1% of payroll on recognition. Outlining your budget and allocating funds for rewards is the next step in creating a recognition program that works for your company.

The most successful recognition programs boil down to three costs: 

  • Cost of service awards 
  • Cost of top-down recognition 
  • Cost of peer-to-peer recognition

Depending on your company’s needs, you’ll want to decide how much of your budget to invest in each category. Use our ROI Calculator to map out all the possibilities! 

Regular and frequent recognition not only costs less than managing sporadic manual rewards, but it will help you achieve a higher ROI than you thought possible. 


5. Roll-Out a Recognition Program


So, you’ve aligned recognition with your company’s needs and allocated the funds, now it’s time to roll-out those rewards. 

But what exactly are you rewarding? Are you recognizing people, their efforts, or the results? Hone in on the specific behaviours or outcomes you want to see from your employees so the expectations are clear. 

Verbal or financial incentives are a great jumping off point for recognition, but to create long-term engagement, you’ll want to encourage intrinsic motivation outside of external rewards. While the rewards themselves let your employees know they are doing a good job, it’s the intent behind them that drives engagement.

Peer-to-peer nominations and real-time rewards make recognition feel less like a ‘transaction’ and more like a positive interaction between the members of your Team.

Guusto's employee reward software helps you achieve this through our Nomination Box feature, which allows users to nominate their Team Members for recognition and send Guusto gifts through your Team Admin. Users can also enter members into a draw for every nomination they receive to win a larger reward! 


6. Build a Culture of Recognition 


According to a SHRM study, 77% of employees agree that their engagement at work depends on having good relationships with their coworkers. 

At Guusto, we believe in the importance of building a Culture of Recognition that fosters these relationships. Start by providing more opportunities for Team Members to bond and collaborate on projects regularly. 

To encourage recognition from all directions, break up the work week with informal recognition. Even something as simple as messaging your Slack channel when an employee does well on a task makes that individual feel valued and allows their peers to jump in with praises of their own.


Impactful Recognition


Having a clear strategy and budget for recognizing your Team simplifies your workload and ensures your employees, both remote and onsite, perform high.

Celebrate what your employees do well and provide support in the face of challenges. In a time of so many restrictions, give your Team Members the gift of flexibility. 

We hope this article helps you develop a strong system for recognition and inspire your employees to aim higher, take more risks, and work as a team. If you have any ideas we didn't cover, feel free to share them in the comments below. 

Guusto is every HR professional's dream come true. Simple and impactful recognition meets performance and budget tracking, customer rewards, and best of all, a day’s worth of clean drinking water donated for every gift you send. 

Get in touch with our team if interested in learning more!


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What's Next?

All companies have purposes and values they want to to reinforce in their company culture. However, many are not doing enough to align their employees with these values, which is costing them time and money. 

So, our next blog will explore How to Align Your Employees With Your Company's Aspirational Identity. We will dive into the following:

  • What is aspirational identity? 
  • Organizational identity vs aspirational identity
  • How to ground your aspirational identity in recognition
  • Effect of aspirational identity on KPIs

Is there something you want to explore further? Leave a comment below or connect with me on LinkedIn. 

Muucho Guusto,


Culture is the Ultimate Advantage

Set yourself apart using the power of company culture. Stand out to new applicants and motivate your team to do their best work.

Skai Dalziel

Written by Skai Dalziel

Skai is the Co-Founder of Guusto. He leads the Customer Success Team, and loves helping HR leaders build workplace culture by sharing his experiences from working with thousands of companies.

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