Cicero 2015 research: Employee performance: What causes great work?

It’s not about the pay – financial rewards are not the biggest motivator
“Cash matters in people’s lives, but it’s not all that matters,” said Dr Whillans in 2019. She researches
what makes people happy. “What really matters in the workplace is helping employees feel appreciated.”
Employee recognition is a primary motivator. Many studies show that what workers want from their jobs is
not more benefits or money – it is more recognition for work well done. Research into the impact of pay
has shown that employees often say pay is very important, but pay rarely correlates strongly with overall
satisfaction (only if the pay level is perceived as being really bad). Where pay is low, it is usually just one
component of an overall unsatisfactory employer attitude and behavior.
A 2018 BetterUp study, reported in the Harvard Business Review online, found that more than 90% of the
2,285 US professionals surveyed were willing to trade a percentage of their lifetime earnings for greater
meaning at work. More meaningful work involves creating a sense of achievement in work activities, and
more acknowledgement by peers and managers of work well done. Suitable employee recognition is
essential to a sense of meaningful work.

Creating more meaningful work

“It is more important than ever that employees find meaning in their work. Traditional rewards systems
and career ladders are disappearing, so workers need new reasons to believe in their companies.” These
are the conclusions drawn in a 2018 McKinsey article by Prof. Dan Cable and Associate Prof. Freek
Vermeulen, who go on to say:
…By now, it is well understood that people who believe their job has meaning and a broader purpose are more
likely to work harder, take on challenging or unpopular tasks, and collaborate effectively. Research repeatedly
shows that people deliver their best effort and ideas when they feel they are part of something larger than the
pursuit of a paycheck.”
What is the role of employee recognition in making work more meaningful? Cable and Vermeulen note:
“Put simply, work becomes more meaningful when people know that their actions are noticed and
appreciated…Good leaders make constructive praise a regular part of their management routine.” They
suggest: “Periodically make a note of one good thing done by each team member, thank them for it, and
describe why it made things better.”
In an influential article in the Harvard Business Review in 2011, Prof. Teresa Amabile and researcher
Steven J. Kramer also found that recognition is a key factor in employee motivation and productivity. The
researchers found that what motivates people on a day-to-day basis is the sense that they are making
progress. When managers recognize people for the work they do, it signals they are important to the
organization. Recognition feedback validates the employees’ sense of worth and achievement.
The BetterUp study in 2018 supported the findings of Amabile and Kramer’s research. Only 1 in 20 people
rated their current jobs as providing the most meaningful work they could imagine having, and on
average, the respondents said they would be willing to forego 23% of their entire future lifetime earnings
in order to have a job that was always meaningful.
Employees with very meaningful work spend an average of one additional hour per week working, and
take two fewer days of paid leave per year. Based on established job satisfaction-to-productivity ratios,
highly meaningful work will generate an extra $9,000 per worker annually, according to the BetterUp
researchers, who also noted:
Explicitly sharing experiences of meaningful work is an important form of social support. Organizations can
encourage managers to talk with their direct reports about what aspects of work they find meaningful, and get
managers to share their perspectives with employees, too. Managers can also build in time during team
meetings to clearly articulate the connection between current projects and the company’s overall purpose.
Employees can more easily see how their work is meaningful when team project goals tie into a company’s
larger vision.
Praise from peers and managers is a key component of the meaningful workplace, for instance praise
when goals are accomplished and projects completed.

Better retention
During conditions of low unemployment, workers will not tolerate a disappointing workplace for the sake of
job security. As a result, nearly half (47%) of 738 HR professionals cited employee retention/turnover as
their top workforce management challenge in an SHRM survey in 2018. In the survey, two-thirds of HR
professionals agreed that employee recognition helps with retention.
Industry figures show that the average overall turnover rate in 2016 was 18%, of which voluntary turnover
was 13%. The true cost of voluntary turnover not only involves direct costs, like cost per hire and first-year
orientation and training, but also includes the interim reduction in labor costs and lost productivity costs. In
total, it costs organizations around $100,000 for every employee who leaves. And this doesn’t include
other indirect costs such as lost client relationships, lost institutional knowledge, and previous training for
the employee leaving.
Employees who have been recognized with service awards tend to stay longer with their employer. For
instance, a survey conducted for OC Tanner Institute in 2012 found such employees stay around 40%
longer with their employer. This leads to significant cost savings and productivity benefits to the employer
and more stability and satisfaction to the employee.
The BetterUp 2018 study, discussed above, concluded that:
Additional organizational value comes in the form of retained talent. Employees who find work highly
meaningful are 69% less likely to plan on quitting their jobs within the next 6 months, and have job tenures that
are 7.4 months longer on average than employees who find work lacking in meaning. Translating that into
bottom line results, enterprise companies are estimated to save an average of $6.43 million in annual turnover-
related costs for every 10,000 workers, when all employees feel their work is highly meaningful.

Offsetting workplace loneliness

A 2017 cover story in the Harvard Business Review (“Work and the loneliness epidemic”) and
other articleselsewhere in the management literature highlight the feelings of loneliness and isolation
experienced by many employees around the world. Loneliness affects employee health and well-being,
which lead to significant workplace costs. Employee recognition is one way that helps workers improve
relationships with their peers.
Research shows that loneliness has the same effect as 15 cigarettes a day in terms of health care
outcomes and health care costs. Lonelier workers perform more poorly, quit more often, and feel less
satisfied with their jobs — costing employers upwards of £2.5 billion ($3.5 billion US) in the UK alone.
Former US Surgeon General Vivek Murthy calls loneliness “the most common pathology”, with nearly 40%
of Americans reporting being lonely.
Positive social support makes a big difference to lonely workers. For instance, research had found that
opening a conversation with a small offering of peer-based praise can be sufficient to forge a lasting social
bond. Over time, these prosocial nudges can steer a workplace in the right direction, creating a healthier,
more supportive culture.

Happier on the home front

Also, employees tend to be happier at home and work when they receive recognition in the workplace. In
a 2014 Globoforce workforce mood tracker survey, 73% of employees reported that being recognized
increased their happiness at work and 35% said being recognized increased their happiness at home.
Use this data to make your case
The data featured in this article equips you to make a really strong business case to introduce employee
recognition in your area, or even to top management to support an organizational employee recognition
program if you don’t already run such programs. If your organization doesn’t run all three broad types of
recognition (years of service, workplace achievements, and notable efforts), you can seek to persuade
management to run all three – because of better results when you do. In addition, it is important to
regularly reinforce to senior management the compelling data highlighted in this article so they continue to
support the value of implementing employee recognition activities in your organization.

What you can do from here

You can read more about top ways to introduce employee recognition activities in your work area or whole
organization in my helpful, detailed ebook, How to create a top employee recognition program.

Why employee recognition is so important – and how you can start

doing it
To be really effective in your job, you need to understand the importance of praising
others for their good work, to apply the principles of employee recognition yourself and to
encourage others to initiate it in their working relationships.
Specialist in behavioral science, Dr Ashley Whillans from the Harvard Business School,
summarized this issue concisely in a 2019 article:
What really matters in the workplace is helping employees feel appreciated.”
Employee recognition is the timely, informal or formal acknowledgement of a person’s or team’s
behavior, effort or business result that supports the organization’s goals and values, and which has clearly
been beyond normal expectations.
Appreciation is a fundamental human need. Employees respond to appreciation expressed through
recognition of their good work because it confirms their work is valued by others. When employees and
their work are valued, their satisfaction and productivity rises, and they are motivated to maintain or
improve their good work.
Praise and recognition are essential to an outstanding workplace. People want to be respected and
valued by others for their contribution. Everyone feels the need to be recognized as an individual or
member of a group and to feel a sense of achievement for work well done or even for a valiant effort.
Everyone wants a ‘pat on the back’ to make them feel good.

See opportunities and act on them

There are two aspects to employee recognition:
1. The first aspect is to actually see, identify or realize an opportunity to praise someone. If you are not
in a receptive frame of mind you can easily pass over many such opportunities. This happens all too
frequently.
2. The other aspect of employee recognition is, of course, the physical act of doing something to
acknowledge and praise people for their good work.
Yet Gallup analysis in 2018 found that only 1 in 3 US workers strongly agreed they have received
recognition or praise for doing good work in the previous 7 days. Gallup consultants recommend that
recognition should be given weekly in broad terms to those who deserve it – and in a timely way so the
employee knows the significance of their recent achievement and to reinforce company values.
Vital communication role in giving recognition
Why should you get involved in employee recognition? Firstly, because you can use the principles to great
effect in your own working relationships (and personal relationships).
Secondly, because employee recognition has a huge communication component! Recognizing people for
their good work sends an extremely powerful message to the recipient, their work team and other
employees through the grapevine and formal communication channels. Employee recognition is therefore
a potent communication technique.
Employee recognition isn’t rocket science – it is an obvious thing to do. Despite the unquestioned benefits
arising from employee recognition, one of the mysteries of the workplace is that recognition invariably is
done badly, if done at all. A 2017 Harvard Business Review article, “Why do so many managers avoid
giving praise?” (subscription access) throws some more light on this topic.
Managers need reinforcing and coaching. They need a program, principles and procedures to help them
apply recognition effectively within their area of responsibility. Employee recognition remains an
undervalued management technique – and it can be completely cost-free at the individual workplace level!
One thing you can do is to ensure there are questions on employee recognition in your organization’s
employee surveys. The results can be used to prove the need for greater employee recognition.
Surveys conducted by Sirota Consulting revealed that only 51% of workers were satisfied with the
recognition they received after a job well done. This figure is as conclusive as you could get – it resulted
from interviewing 2.5 million employees in 237 private, public and not-for-profit organizations in 89
countries around the world over 10 years.

Cost-benefit analysis of employee recognition

The cost of a recognition system is quite small, even cost-free, and the benefits are large when
implemented effectively. Extensive research has found the following benefits result at very low cost:

Benefits
 Increased individual productivity – the act of recognizing desired behavior increases the repetition of
the desired behavior, and therefore productivity. This is classic behavioral psychology. The reinforced
behavior supports the organization’s mission and key performance indicators.
 Greater employee satisfaction and enjoyment of work – more time spent focusing on the job and less
time complaining.
 Direct performance feedback for individuals and teams is provided.
 Higher loyalty and satisfaction scores from customers.
 Teamwork between employees is enhanced.
 Retention of quality employees increases – lower employee turnover.
 Better safety records and fewer accidents on the job.
 Lower negative effects such as absenteeism and stress.

Costs
 Time spent in designing and implementing the program.
 Time taken to give recognition. Dollar cost of the recognition items given
 Time and cost of teaching people how to give recognition.
 Costs of introducing a new process.
Individual Performance → Recognition → Increased productivity and satisfaction → Increased
value to your organization

Measurable improvement in profitability

Measuring the direct impact of recognition on profitability is difficult because it is only one of many factors
influencing employees in every workplace. However, case studies make a persuasive case that bottom
line benefits have been achieved through recognition schemes. The Walt Disney World Resort
established an employee recognition program that resulted in a 15% increase in staff satisfaction with
their day-to-day recognition by their immediate supervisors. These results correlated highly with high
guest-satisfaction scores, which showed a strong intent to return, and therefore directly flowed to
increased profitability.

Engagement the key driver of organizational performance improvement

Extensive Gallup research has found that engaged employees contribute to the economic health of their
organization in ways that other employees do not. Employees who are engaged are more likely to stay
with their organization, reducing overall turnover and the costs associated with it. They feel a stronger
bond to their organization’s mission and purpose, making them more effective brand ambassadors. They
build stronger relationships with customers, helping their company increase sales and profitability.
Gallup defines engaged employees as “those who are involved in, enthusiastic about and committed to
their work and workplace,” while Aon defines employee engagement as “the level of an employee’s
psychological investment in their organization.” Between 2001 and 2018, the average US employee
engagement level only rose from a low 30% to a similarly low 34%. According to Gallup’s 2017 State of
the American Workplace, the world’s best organizations record an average of 70% engaged employees.
This shows that most employers have a long way to go. Better recognition practices would be central to
increasing the level.

Recognition is the most important factor in employee engagement

Proof
The Aon 2018 Trends in Global Employee Engagement survey, conducted in 1,000 companies employing
8 million people globally, showed rewards and recognition as “the strongest driver of engagement,” and
that recognition for contributions (apart from pay and benefits) was the key factor in the rewards and
recognition component.
The Boston Consulting Group conducted an online global study of 200,000 employees from 189 countries
in 2014, finding that “Globally, the most important single job element for all people is appreciation for their
work.” Appreciation was the top factor for happiness on the job, ahead of 25 other factors, and was
highlighted in the findings as an indication of “the growing importance of ‘softer’ factors.”
A Cicero study in 2015 found that employees self-reported that their own drivers of great work were:
Source: Cicero 2015 research: Employee performance: What causes great work?
If you want further detailed research findings on the vital importance of employee recognition to employee
engagement and organizational performance, read my recent article, “Here’s detailed proof that employee
recognition lifts workplace performance.”

High cost of disengaged employees

On the other hand, lack of recognition leads to disengaged employees, who are more likely to steal from
their company, negatively influence their coworkers, miss work days and drive customers away. The cost
of extremely negative or ‘actively disengaged’ workers comprises a massive 10% of the US Gross
Domestic Product annually, including workplace injury, illness, employee turnover, absences and
fraud. This amounts to a cost of around $500 billion per year to the economy. Gallup Data for 2018 show
that around 13% of US employees are actively disengaged. According to Chairman and CEO, Jim Clifton:
They are miserable in the workplace and destroy what the most engaged employees build. The remaining 51%
of employees are not engaged — they’re just there.”
In addition, Gallup data shows that actively disengaged employees are twice as likely as engaged
employees to seek new jobs (73% compared with 37% respectively), while 56% of not-engaged
employees seek new jobs. It can cost about $100,000 to replace each person lost to the organization, so
the direct cost of losing employees can really add up. According to industry analyst, Josh Bersin, the
effective cost of losing an employee includes:
 the cost of hiring a new employee (advertising, interviewing, screening, hiring), and onboarding them
(training, management time)
 lost productivity while the new person gets up to speed
 lost engagement as other employees perceive high turnover and tend to lose productivity
 reduced customer service efficiency and errors
 training cost and cultural impact.
“Many managers feel awkward showing gratitude and shy away from it [recognition],” said Dr Whillans of
Harvard Business School, quoted above in a 2019 article. “That’s why organizations need to make a push
to help managers with this. It can make all the difference in whether a talented worker stays or goes.”

How to give day-to-day employee recognition

You can be a catalyst in your organization. Initiate it in your area. You could start doing it discreetly, not
even telling others about the change, but doing it and observing the results.
Spontaneously praise people – this is highly effective. To many employees, receiving sincere thanks is
more important than receiving something tangible. Employees enjoy recognition through personal, written,
electronic and public praise from those they respect at work, given in a timely, specific and sincere way.
This day-to-day recognition is the most important because it gives individuals and teams at all levels the
immediate opportunity to recognize good work by other employees and teams. It also enables them to be
recognized on the spot for their own good work, setting an example to other employees of desired
behavior that aligns with organizational objectives. This is powerful reinforcement of desired behavior, and
is the principle of social proof in action, a term pioneered by social psychology professor Robert Cialdini.
Writing an article, “Harnessing the science of persuasion,” in the Harvard Business Review (subscription
access), he defined the principle in this way:
We view a behavior as correct in a given situation to the degree that we see others performing it…People
follow the lead of similar others.”
Similarly, the results of Dr Whillans’ research showed that recognition fulfills employees’ needs to
appear competent and feel a sense of belonging by socially connecting with colleagues in a meaningful
way.
Even if you aren’t a manager, you can be alert for opportunities to recognize others and take the initiative
to do something. You can nudge your manager to do more of it and to encourage it in other departments.
The best formula for recognizing an individual for their efforts is:
1. Thank the person by name.
2. Specifically state what they did that is being recognized. It is vital to be specific because it identifies
and reinforces the desired behavior.
3. Explain how the behavior made you feel (assuming you felt some pride or respect for their
accomplishment!).
4. Point out the value added to the team or organization by the behavior.
5. Thank the person again by name for their contribution.
Recognition is a key success factor even at higher levels of management. Dr Lawrence Hrebiniak,
Professor of Management in the Wharton School at the University of Pennsylvania, states in his
book, Making strategy work: leading effective execution and change:
What’s absolutely critical…is that the organization celebrates success. Those who perform must be recognized.
Their behavior and its results must be reinforced…Managers have emphasized this point to me time and time
again, suggesting that, as basic as it is, it is violated often enough to become an execution problem…Give
positive feedback to those responsible for execution success and making strategy work.”
I believe employee recognition is so important, I have written an ebook about it based on my own
experience in introducing and managing employee recognition in several organizations. If you would like
to know how to initiate and conduct employee recognition activities, you can find lots of ideas, and the
best framework with guiding principles in my eBook, How to create a top employee recognition program.

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