Over the past several years working in the employee recognition space, there’s one statistic that has continuously lingered in the back of my mind:
At some point in their career, one in two employees have left their jobs to get get away from their manager.
This was one of the key findings from Gallup’s State of the American Manager report back in 2015. It conveys the importance of the manager-employee relationship and is a good reminder for me — as well as the HR teams I have conversations with everyday — of the impact that you can gain through increased investment in your managers and leadership team.
To take it a step further, NYU Steinhardt shared that favorable treatment from a supervisor is synonymous with support from the organization, and when employees feel that they are appreciated by their company, both their motivation to continue receiving employee rewards and their level of job performance increase accordingly.
That’s why I sat down to write this article: to discuss the merits of a manager-driven employee recognition program, in comparison to peer-to-peer employee recognition programs that you might be considering.
The power of manager-driven employee recognition
Manager-driven employee recognition programs, as the name implies, allow employee rewards to be given at the discretion of the manger. This means that managers have the autonomy to recognize and reward employees based on company-established guidelines for which behaviors deserve to be recognized . There are several reasons why this type of recognition is powerful:
1. Strengthens the manager-employee relationship
Gallup’s stat shows the impact a manager can have on a direct report’s happiness and engagement levels. If a bad manager has the ability to drive employees away from a company, a good manager has the power to inspire them to stay.
Employee recognition is a great way to nurture this relationship in a positive direction and show employees that their manager both sees all the hard work they’re putting in and values them as an integral part of the team. A simplified, centralized platform for distributing employee rewards helps to build manager adoption, learn more about ours online here.
2. Defines clear expectations for what constitutes reward-worthy behavior
Establishing a clear framework builds transparency around your employee recognition efforts. This way, both managers and employees have visibility into which behaviors, actions, or milestones deserve employee rewards to inspire daily actions towards their goals.
As we’ve learned with Millennial and Gen Z cohorts, these employees thrive in finding a sense of purpose and contributing to the greater org - seeing how their contributions shape the business will continue to inspire them towards increased effort and performance. Because managers frequently serve as liaisons between front-line employees and senior executives at a company, they have the unique opportunity to connect how the employee’s behavior supports the broader business.
3. Allows for operational oversight
Without some form of managerial and operational oversight, employee recognition and employee reward programs can be misused, with employee rewards being distributed against company guidelines or inaccurately reported against a budget. Manager-driven reward programs allow for additional control and budget management and, when well-trained, ensure managers are thoughtful stewards of the program’s vision.
If you’re not considering manager-driven programs, you might be weighing the alternative: peer-to-peer programs (P2P). P2P programs allow for multi-directional employee recognition, with employee rewards distributed from an employee to their manager, employee to employee, etc. They’re usually points based and are, most notably, a higher frequency reward model.
You may be asking: “What’s wrong with high-frequency employee rewards?” Conceptually, this characteristic of P2P employee recognition and reward programs sound like a great idea but can lead to some major downsides.
Let’s dig in a bit deeper:
Why more isn’t always better when it comes to reward volume
Imagine yourself in this position. Your company launches a P2P employee recognition program where you earn five to 25 points in a given setting, the equivalent of $5.00 to $25.00 in value. Your first reward feels pretty cool, and so does the second, which you receive the next week. Your third however, which you got for helping someone move desks, feels a little less impactful (“I didn’t really do anything meaningful to get the points”). The fourth recognition is similar, receiving 10 points totaling 34 points over three months… Now you might be thinking, ”What can I get with this?”, or “Why did I receive these points again?”
P2P employee recognition programs tend to lead to diminishing marginal impact and utility. This means that employee rewards become less impactful with each reward you receive. Employees get used to the small recognition interactions and start to blur out why they received the points to begin with.
Here are a few additional reasons why the high-frequency nature of P2P programs may not be the best idea:
1. Not always tied to material business contributions
Unlike manager-driven employee recognition programs, P2P programs, because they enable smaller monetary reward distributions (typically only a few dollars in value), frequently devolve into teammates rewarding each other for minor tasks instead of meaningful contributions.
Do these sound familiar? “Thanks for watching my dog during my client meeting!” “Thanks for bringing me lunch while I was heads-down prepping for my presentation!” These small props become common shoutouts in the social feed. Over time, it becomes unclear to the employees receiving the employee recognition whether their work is actually valuable to the business or not, or if they were just doing someone a favor.
2. Not distributed evenly
A high frequency of employee rewards doesn’t mean those rewards are being evenly distributed. P2P employee recognition programs have been shown to skew toward more cross-functional and highly visible teams, such as marketing and sales. This leads to siloing within the organization, where highly productive teams in back-of-the-house roles — such as finance, engineering, legal, and even HR — don’t see as many opportunities for recognition, and could feel unappreciated for their work.
If you choose to run a P2P program, I recommend you segment your data by department and review bi-annually to ensure all teams are adopting the platform.
3. Leads to low engagement
Of course, this siloing leads to low engagement and adoption. We see the tipping point for an effective employee recognition program to reach 65-70% adoption across your organization. But when recognition is only reaching certain teams as described above, you’re spending a lot of resources on a program that the majority of your employees aren’t using. Which means your desired engagement impact (increased motivation rates, retention, a more positive company culture) will be muted.
Achieving employee recognition program balance
The good news is that there are ways to strike balance between the positive aspects of the P2P employee recognition and employee rewards program, along with the value of a manager-driven one, to fit your company’s unique needs. Below are tips on how to achieve this.
Introduce managerial oversight
As I mentioned before, allowing managers to be involved in the employee recognition process — even if it’s a P2P model (meaning managers are notified when their employees are rewarded by peers) — is important because it shows employees that their manager sees their contributions and values their work. It’s also crucial because managers serve as a filter between peers to ensure employee recognition is meaningful.
Here’s what this might look like in practice: let’s say an employee went on vacation for a week and wants to recognize her colleague, who stepped up to fill in her role and did an amazing job. The manager of the recipient would have to review the amount, justification, and other details around the reward before granting approval. This way, everyone involved knows this is a legitimate reward tied to business values or outcomes, and the manager is also given visibility into the great work of their direct report!
Increase reward values
One of the ideas we firmly believe in at Blueboard is that small, frequent employee rewards lose their significance, very quickly. Because let’s be honest: a $20 gift card to Starbucks given every few weeks isn’t super inspiring, and begins to feel more like a perk that only goes noticed once it’s taken away.
So instead of making your P2P employee rewards small dollar amounts that are given on a regular basis, I recommend decreasing the frequency and increasing the value for higher impact, celebration, and shareability.
Set guidelines for participation
Guidelines help employees and managers act more thoughtfully when it comes to employee recognition. For example, if you put a limit on the number of times an employee can give a reward per quarter, they’re more likely to screen for a meaningful moment when their colleague truly deserves recognition. Whether it’s for displaying company values, going above and beyond in their role, or adding to a stronger company culture, guidelines that describe and outline the actions deserving of recognition increase visibility across all parties and help motivate employees toward the goals that most greatly drive the business. Because crushing your sales quota or ideating a new product feature has a much greater impact than helping watch your coworker’s dog for a half-hour (as much as we love our furry teammates).
While I’m an advocate of manager-driven employee recognition and employee rewards programs, I’m also supportive of P2P programs that have the right boundaries, managerial oversights, and incentives baked into their processes. Regardless of the path you choose — you’ll ultimately want to roll out a program that compliments your company culture and business goals.
I’m always open to hearing different perspectives on this topic, and would love to chat 1:1 if you’re currently weighing employee recognition programs at your company. Feel free to reach out to me on LinkedIn, or find me at Kevin@blueboard.com.