Anyone who has ever felt ignored by their company’s “high performers” track or frustrated that only salespeople get bonuses is familiar with the curse of the failed recognition program.

According to a 2015 report from employee recognition provider Globoforce, 81 percent of companies offer some form of formal recognition program. But just having a recognition program doesn’t mean it’s working, according to Jim Hemmer, CEO of WorkStride, an employee recognition platform.

“Randomly handing out gift cards from your bottom drawer isn’t going to make a difference,” Hemmer said. Recognition initiatives are intended to make employees feel more engaged with the company and to drive specific behaviors that improve the business.

Many companies make serious errors when implementing recognition programs that cause them to have no effect — or worse, make people feel left out, undervalued or stressed from constant competition.

High-Potential Rewards

George Marc-Aurele learned this lesson the hard way when he joined digital media company CPX Interactive, or CPXi, in 2012 as its chief people officer. At the time, the New York-based firm was growing rapidly, and Marc-Aurele was brought on to help develop a more mature human resources culture and improve the overall employee experience.

At the time, the company had no formal recognition program, so one of the first steps Marc-Aurele took was to implement an end-of-the-year reward for high achievers. The idea was to reinforce the desired “performance culture” of the organization, Marc-Aurele said, but it wasn’t entirely well received.

“People were upset because some people got recognized while others didn’t,” Marc-Aurele said. However, this wasn’t all bad. “It spurred a lot of conversations about what was important to the company.”

Marc-Aurele dropped the program after the first year. Instead, he decided to work with employees to figure out what they wanted from a recognition program. He surveyed employees about the words they felt represented the CPXi culture, then formed committees to hone those words into six core values: accountability, uncommon ability to achieve, rapid adaptability, caring community, balance, and curiosity that pushes boundaries.

“It was critically important that we put the words into the language of the culture,” he said. “Otherwise it would have just been words on a wall.”

Once the values were defined Marc-Aurele returned to the idea of a recognition program, this time rolling out a game-based, peer-driven program where employees get points for demonstrating the company’s core values on a day-to-day basis and for nominating other employees for recognition. They can also get points for completing recognition challenges, like writing a blog about their achievements at the company or posting a selfie in their company T-shirt outside the office.

Moreover, employees can trade the points in for prizes, and there is an end-of-the-year raffle for a $1,000 plane ticket voucher. “It took hold really quickly,” Marc-Aurele said, adding that the prizes are less important than the opportunity to give teammates a shout-out.

Within a few months of rolling the program out, employees had given out hundreds of nominations. Marc-Aurele highlights nominees in the “Monday Missive” email the company sends out and in weekly meetings to spur ongoing participation. “People have a psychological need for recognition,” he said. “Having this program in place has made CPXi a better place to work.”

What Should Be Recognized?

Many recognition experts agree that peer-based programs can be the most successful because they address many common challenges recognition efforts face.

For instance, when employees are empowered to recognize their peers, they are more engaged with the initiative and feel value both in giving and receiving acknowledgment. It also lifts the burden from managers to be constantly looking for the right behaviors to recognize.

That all helps to make a program stick, said Kate Ondrasik, director of internal communications for Orlando Health, one of the largest health care service providers in Orlando, Florida. And that’s exactly what Ondrasik was looking for two years ago when her team was asked to come up with a replacement for the company’s outdated, management-driven recognition program. The old system was paper-based and relied on managers to recognize “champions” in the workplace. “It had a lot of problems,” Ondrasik said.

The old program, which had been in place for years, was also time consuming, requiring managers to fill out and submit paperwork for every formal recognition. Additionally, the values they were supposed to recognize were vague, making it difficult to identify specific behaviors that define a champion.

“It eventually evolved into awards being given to people for being ‘nice’ or ‘helpful,’ ” she said, and only a very small number of people were recognized every year.

This is a common problem with recognition programs, according to WorkStride’s Hemmer. When recognition programs become confusing, vague, cumbersome or not well marketed, they become a burden rather than a benefit. Ultimately, only a few managers take part and nobody really knows who’s getting rewarded or why.

“If you are going to build a reward program, it should be easy, flexible and build affinity back to the company,” Hemmer said.

Ondrasik eventually ditched Orlando Health’s old program and turned to employees to figure out how to replace it. She reached out to the company’s “team council,” which is a group of employees who apply for annual positions to help shape the company’s culture. The council in turn surveyed employees about what they wanted in a recognition program, reviewed other programs, and talked to recognition vendors to come up with a plan. It came up with a new recognition system named Applause Central.

The new program is designed to reward seven behaviors focused on things like respect, ownership and inclusion. Using the WorkStride platform, all 15,000 employees can publicly recognize each other for demonstrating any of these behaviors. Rewards vary from “kudos,” which anyone can give, to gift cards of up to $20, which managers are allotted on a monthly basis.

Because the program is run both online and through a mobile app, people are more likely to use it. “Having a mobile feature was key because most of our employees don’t sit at a computer,” Ondrasik said.

To promote the program, all nominations are posted on a digital leader board and on a scrolling news bar on the company’s intranet. Ondrasik’s team is also always looking for opportunities to promote the program through the company newsletter and in team meetings. The employee council also chooses a champion from that week’s nominees to showcase in a video interview on the company portal.

“They always have a lot of options to choose from,” Ondrasik said. For example, one week they featured several neonatal intensive-care unit staffers who used their own wedding dresses to make christening gowns for babies who wouldn’t survive. Another week they interviewed a trauma center employee who gave his shoes to a homeless patient when he got discharged.

One of the great benefits of the peer-based system is that employees are more likely to see their colleagues going the extra mile for patients. The platform gives them an easy way to acknowledge that. Ondrasik said one of the most popular features of Applause Central has been the simple thanks that anyone can hand out.

In the first 10 months, employees and managers gave out 82,815 recognitions, 88 percent of which were nonmonetary, Ondrasik said. “The data tells us that including nonmonetary awards is key to success of recognition.”

Bribes Don’t Work

Many HR leaders find that money isn’t the most valued part of employee recognition and might often just be a throwaway expense. “Gift cards and prizes feel like bribes, and you should only use bribes as a last resort,” said Kris Duggan, CEO of BetterWorks, a cloud-based goal-setting software program. “Bribes don’t change behavior, which is the whole point of recognition.”

Duggan discovered this two years ago, when BetterWorks was trying to fill a few key executive roles but couldn’t give the base salary that competing companies were offering. So he created a base-plus-bonus compensation package just for those new hires, with incentives for meeting key goals.

The rest of the company just received public recognition on the company’s social network via “cheering” and other acknowledgments given by peers and managers. The result: “The people receiving the ‘bribes’ didn’t perform any better than the people receiving cheers,” he said.

As a result, the company is phasing out all base-plus-bonus salary packages and focusing more on encouraging peer-to-peer recognition and teaching managers how to celebrate their people and provide real-time feedback that reinforces the right behaviors. “You have to pause and reflect on what you’ve accomplished before you can move onto the next thing,” Duggan said. “A lot of companies skip this step, but I think it is the lifeblood of any recognition effort.”

George Hu, founder of the social recognition platform Peer and former chief operating officer at Salesforce.com, has a similar sentiment about tying financial gains to recognition. “Giving people gift cards has no impact,” he said. “And it can be demotivating when the same people get recognized over and over.”

Instead, Hu prefers to reward people with access. As the COO at Salesforce, when he saw that an employee was going above and beyond, he invited them to sit on a management meeting or gave them opportunities for one-on-one mentoring. He also encouraged managers to do the same. “It’s more valuable because it gives them entry into a new relationship and makes other executives aware of them,” Hu said.

Managers in these situations used Chatter, the company’s peer-to-peer social engagement platform, to find employees who are frequent recipients of praise for additional mentoring. Every quarter, the leadership team invites the top 30 recipients of praise to the worldwide management meeting where they get a chance to build relationships with top executives who they might otherwise never meet.

Because these employees are chosen based on the number of acknowledgments they receive, it takes bias out of the process, Hu said. In one case, the data drew Hu’s attention to an engineer who was extremely shy and introverted but had been recognized more than 100 times in one quarter for mentoring new hires. “The recognition program helped us identify him, and now he’s being developed as a leader,” Hu said.

Hu noted that retention rates among those employees who were rewarded with access and mentoring was “through the roof,” reinforcing his belief that development and encouragement hold a lot more value than a gift card. Hu is now applying that model at Peer, which links feedback with performance and recognition.

“Recognition and feedback go hand-in-hand,” Hu said. “You have to approach them both together if you want recognition to have an impact.” While most recognition programs have some redeeming value, Hu added, putting extra time and thought into what, how and who leaders recognize can go a long way toward making these programs worth the effort.

How to Make Recognition Stick

There are a few steps talent leaders can take to be sure their recognition programs have the effect they desire.

1. Ask employees what they want. When employees help shape the recognition program, it’s going to reflect their voice and values, said George Marc-Aurele, chief people officer at CPX Interactive.
2. Make it social and peer-to-peer. “When people see others getting recognized, they want to get in on it, which makes it grow organically,” Marc-Aurele said.
3. Make it easy. You want a system that allows employees to give recognition at the click of a button, said Kate Ondrasik, director of internal communications for Orlando Health.
4. Broadcast leadership commitment. Put a video on the intranet of the CEO talking up the program as a way to promote it,said Jim Hemmer, CEO at WorkStride.
5. Use recognition as an opportunity to mentor. “All recognition is good, but access to new development opportunities is a lot more valuable than a gift card,” Marc-Aurele said.
6. Don’t “set it and forget it.” Promote the program via company communications and social media, highlighting winners at meetings and on the website, and sending reminders to keep people engaged, said Cord Himelstein, vice president of marketing for Michael C. Fina.
7. Let future employees know you care. If you have a great program, talk it up on your website, on social media and in recruiting and onboarding efforts.

Reprinted from TALENT MANAGEMENT magazine