Page Title

Recognition: A Powerful but often Overlooked, Leadership Tool to Improve Employee Performance

November 20, 2000

"A problem that continues to confound today's organizations is the burdensome drain of financial and human resources caused by employee turnover.  For example, a recent survey of 378 companies summarized in Hrfocus (September 1998) noted that turnover rates continue to hold around 15%.  More alarmingly, the data indicated that the individuals most likely to leave an organization were from critical areas such as information technology, sales, marketing, and customer service.  In addition, the survey indicated that it cost nearly $10,000 per employee to replace these key personnel. 

Although these figures seem daunting, reducing costly turnover and driving up employee commitment and loyalty may not be as expensive and difficult as it would appear.  Data from a recently released study from the Hay Group indicate that factors such as recognition for a job well done, respectful treatment, and coaching and feedback were considered more important than pay in terms of worker commitment (Stum, 1998).  Survey findings such as these have strong implications for the effective leadership and management of people in today's organizations.

In general, there are two basic types of rewards that leaders can utilize to positively reinforce performance-enhancing behaviors.  The first is money.  Certainly pay plays an integral part in rewarding employees and reinforcing positive behaviors. However, often overlooked is the importance of providing employees with non-financial rewards such as recognition and attention.  This second type of reward can be very effective and efficient because it doesn't cost anything, is available for everyone to use, and no one gets too much of it.

A brief survey was conducted for this article examining the importance of employee recognition in a large, public, not-for-profit, service organization.  The survey findings provide further support for the importance of recognizing individuals for their work contributions.  Implications from these findings can serve as a point of departure for specific recommendations for more effective leadership in today's organizations. 

The 254 respondents represented a cross-section of a large organization.  These respondents included management, maintenance, support staff, and front-line employees.  In general, the survey results revealed strong support for the increased need for recognition throughout the organization.

The first question asked if there was an increased need to be recognized for their work contributions.  The respondents overwhelmingly supported this idea, with 243 of the 254 respondents (96%) indicated an increased need for recognition was necessary.  Therefore, Recommendation One for more effective leadership in this organization and others would be to increase the use of non-financial rewards by using creative techniques to recognize employees for o outstanding contributions as often as possible.

The next question asked the respondents to judge the criteria for which someone should be recognized.  The respondents rated quality (81%), performance (72%), work contribution (66%), service/seniority (65%), and other (13%).  A sampling of the written comments falling in the 'other' category included being recognized for: attendance, outstanding work, timely response and resolution of problems, customer service, adding-value, exemplary demonstration of work ethic, and willing to be cross-trained with other departments.    Interestingly, in this unionized environment, length of work service was not ranked as high as other performance-based criteria.  Recommendation Two is that leaders should base recognition rewards not on mundane length of service or subjective factors, but more on objective, performance-enhancing behaviors.

The final survey item asked the participants to indicate which type of recognition they would favor.  Although most mentioned tangible recognition rewards such as a gift certificate or luncheon which do cost the organization, but very little relative to pay incentives, and equal number mentioned public acknowledgment in the newsletter was sufficient.  However, most interesting were the written comments in the 'other' category.  Importantly, the respondents indicated that social recognition rewards were highly valued.  Recommendation Three would be to provide genuine recognition and appreciation for desired performance behaviors.

The implications from this survey seem apparent.  As leaders continue to look for ways to met the productivity, motivation, and retention challenges of today's organizations, the increased recognition of their human resources must be on primary importance.  To summarize a point made by Nelson (1994), if you give employees a choice, the thing they will say has the greatest, most significant impact is a personal, spontaneous, and sincere thank you for a job well done.  The message here is not to diminish or detract from the importance of other types of rewards such as monetary incentives.  Rather, the research and, with the supporting survey results, point out that important, but often overlooked, simple, but sincere recognition is as a potent tool for effective leadership (2000, Luthans, pp. 31-39)."

Reference: Luthans, K. (2000). Recognition: a powerful, but often overlooked, leadership tool to improve employee performance.  The Journal of Leadership Studies, 7(1), 30-39.

The Journal of Leadership Studies is available on loan from the OSU Leadership Center.  A complete listing of all the Leadership Center's resources is available on our website www.ag.ohio-state.edu/~leaders

Leadership Discoveries is a free monthly e-mail mailing about leadership research.  If you have any colleagues who would like to receive Leadership Discoveries, please have them send an e-mail message to flynn.61@osu.edu with the message, Subscribe Leadership Discoveries.

Back to Top >

Created: 2008-02-26, Updated: 2009-02-17