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Recognition:
A
Powerful,
but
often
Overlooked,
Leadership
Tool
to
Improve
Employee
Performance
Kyle
Luthans
L7niversity
ofNebraska
at
Kearney
Executive
Summary
A
key
dimension
for
effective
leadership
involves
reinforcing
and
motivating
others
to
encourage
superior
performance.
Financial
and
non-financial
rewards
can
be
utilized
for
this
purpose.
This
paper
explores
the
background
on
the
nature
and
importance
of
employee
recognition
as
an
effective
leadership
tool
and
reports
the
results
of
a
survey
examining
the value
of
recognition
to
all
levels
of
employees
in
a
large,
nonprofit
institution.
These
employees
indicated
they
value
highly
personalized
recognition
for
a
job
well
done
as
a
critical
dimension
of
their
reward
system.
These
findings
provide
further
evidence
that
employee
recognition
should
be
given
more
attention
by
leaders
as
they
attempt
to
meet
the
retention
and
productivity
challenges
facing
today’s
organizations.
About
the
Author:
Kyle
W.
Luthans,
Ph.D.
is
an
Assistant
Professor
of
Management
at
the
University
of
Nebraska
at
Kearney.
His
current
research
interests
are
focused
on
the
application
and
impact
of
high
performance
human
resource
management
practices
in
various
cultures
and
industries.
32
Introduction
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.
In
the
aftermath
of
downsizing,
employee
loyalty
also
is
on
the
decline.
According
to
the
workforce
commitment
index
(WCI),
a
significant
drop
in
worker
commitment
from
1995 -
1998
has
been
noted.
The
index
showed
lower
employee
commitment
across
all
industries
and
job
functions,
with
customer
service
workers
falling
the
lowest
(Stum,
1998).
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.
For
example,
in
a
recent
poll
taken
by
the
Menlo
Park,
California-based
outplacement
firm
Robert
Half
International,
25
percent
of
HR
executives
said
a
lack
of
recognition
was
the
most
likely
factor
causing
a
good
employee
to
quit
his
or
her
job
(Wallsten,
1998).
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.
The
purpose
of
this
paper
is
to
explore
how
non-financials
such
as
recognition
and
attention
can
be
used
as
an
effective
leadership
tool
for
rewarding
employees.
First,
some
of
the
pertinent
literature
relating
to
the
importance
of
non-financial
rewards
and
their
relationship
with
effective
leadership
is
reviewed.
Next,
the
results
of
a
survey
conducted
to
seek
the
reactions
of
employees
across
all
levels
(n=254)
in
a
large
nonprofit
organization
to
a
proposed
employee
recognition
program
are
discussed.
Implications
and
recommendations
concerning
the
relative
value
of
non-
financial
rewards
as
an
effective
leadership
technique
conclude
the
paper.
The
Rewards-Effective
Leadership
Link
A
primary
activity
of
any
type
of
leader
involves
motivating
and
reinforcing
others
to
encourage
superior
performance
(Whetten
&
Cameron,
1991).
Put
in
another
way,
theories
of
motivation
encourage
leaders
to
tie
important
outcomes
to
desired
behaviors.
Thus,
whether
managers
endorse
some
variant
of
expectancy
theory
(Porter
&
Lawler,
1968)
or
reinforcement
theory
(Skinner,
1974),
the
message
is
clear:
To
sustain
motivation,
leaders
must
demonstrate
to
employees
a
close
link
between
performance
and
rewards
(Campbell,
Campbell,
&
Chia,
1998).
The
relative
importance
of
motivating
and
reinforcing
others
was
reflected
in
the
&dquo;Real
Managers&dquo;
study
(Luthans,
Hodgetts,
&
Rosenkrantz,
1988).
In
this
extensive
study
conducted
over
a
four-year
period,
the
researchers
examined
what
types
of
management
activities
were
typically
associated
with
successful
versus
effective
33
leaders.
The
successful
leader
was
defined
in
terms
of
the
speed
of
promotion
within
an
organization.
The
effective
leader
was
defined
as
( 1)
getting
the
job
done
through
high
quality
standards
and
(2)
getting
the
job
done
through
people,
requiring
their
satisfaction
and
commitment.
Interestingly,
the
successful
leader
was
found
to
spend
a
majority
of
their
time
networking
with
others
than
did
their
less
successful
counterparts.
However,
the
effective
leaders -
the
one’s
who
delivered
quality
results
through
satisfied
and
committed
employees,
were
found
to
spend
a
majority
of
their
time
actively
managing
human
resources
through
motivating
and
reinforcing
their
value-enhancing
behaviors
and
communicating
with
them
on
a
regular
basis.
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.
This
is
especially
true
of
pay-for-performance
systems
which
seek
to
reward
individuals
or
teams
in
a
direct
relation
to
their
contribution
to
organizational
success.
Research
has
consistently
noted
that
when
implemented
correctly,
pay-for-performance
programs
can
be
a
strong
motivator
and
have
a
significant
impact
on
the
bottom-
line
performance
of
an
organization.
For
example,
Kaufman
(1992)
noted
that
the
implementation
of
IMPROSHARE
(a
type
of
group
gainsharing
plan)
had
a
positive
impact
on
manufacturing
productivity.
Specifically,
it
was
found
that
firms
that
implemented
IMPROSHARE
had,
on
average,
decreased
defect
and
downtime
rates
while
productivity
increased
by
15%
over
a
three
year
period.
A
comprehensive
survey
sponsored
by
the
American
Compensation
Association
(ACA)
placed
a
dollar
value
on
the
positive
impact
of
pay-for-performance
techniques.
It
found
a
134
percent
net
return;
i.e.,
for
every
$1
of
payout,
a
gain
of
$2.34
was
attained
(Gibson,
1995).
Thus,
the
effectiveness
of
monetary
incentives,
especially
when
linked
with
performance
outcomes,
seems
apparent.
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.
Some
representative
quotes
from
Nelson’s
( 1994)
best-selling
book,
1001
Ways
to
Reward
Employees,
help
to
highlight
the
importance
of
non-financial
rewards
as
an
effective
leadership
technique.
&dquo;Recognition
is
so
easy
to
do
and
so
inexpensive
to
distribute
that
there
is
simply
no
excuse
for
not
doing
it.&dquo;
-
Rosabeth
Moss
Kanter,
Author
and
Management
Consultant.
&dquo;We
all
like
to
be
recognized
and
appreciated.
Just
by
giving
an
award
or
recognition
certificate,
formally
recognizing
someone
in
front
of
a
group
or
even
buying
a
cup
of
coffee,
we’re
telling
the
employee
that
their
work
is
appreciated.&dquo; -
Harvey
Stein,
President,
Stein
&
Read
Incentives.
The
importance
of
recognizing
individuals
for
their
contributions
is
clearly
reflected
in
these
quotes.
In
any
type
of
situation,
effective
leadership
depends
on
reinforcing,
motivating,
and
rewarding
value
enhancing
behaviors
in
order
to
spur
superior
performance.
As
such,
a
closer
look
at
the
positive
impact
that
recognizing
people
34
can
have
on
organizational
performance
will
be
taken.
In
addition,
some
specific
examples
of
effective
recognition
programs
which
have
been
implemented
successfully
will
be
reviewed.
A
Leadership
Tool
for
Performance
Results
The
idea that
employee
recognition
can
serve
as
a
powerful
reward
is
certainly
not
new~
Herzberg
(1966)
noted
that
consistently
and
frequently
applied
formal
and
informal
recognition
programs
provide
management
with
a
powerful
tool
to
influence
employees
to
live
the
company’s
values
and
implement
its
focused
mission.
In
other
words,
he
recognized
the
importance
of
reinforcing
behaviors
that
contribute
to
organizational
success.
By
specifically
reinforcing
expected
behaviors,
leaders
signal
to
employees
that
their
efforts
are
noticed
and
appreciated.
Considerable
basic
research
has
supported
the
notion
that
non-financial
rewards
can
be
a
potent
leadership
tool
which
can
have
a
significant,
positive
relationship
with
organizational
performance.
For
example,
in
a
recently
completed
meta-analysis
of
behavioral
management
studies
over
the
past
twenty
years,
it
was
found
that
social
rewards
(recognition
and
attention)
had
as
big
an
impact
on
employee
performance
as
did
monetary
rewards
(Stajkovic
&
Luthans,
1997).
In
particular,
results
of
the
meta-analysis
indicated
that
service
organizations
which
used
recognition
as
part
of
their
O.B.
Mod.
Intervention
found
on
average
a
15
percent
performance
improvement.
When
recognition
was
combined
with
performance
feedback
an
average
increase
of
41
percent
in
manufacturing
and
30
percent
in
service
organizations
was
found
(Luthans
&
Stajkovic,
1999).
This
is
just
one
example
that
indicates
the
relative
importance
of
non-financial
rewards
for
effective
leadership
and
organizational
performance
results.
Other
specific
examples
of
employee
recognition
programs
and
their
relationship
with
improved
performance
will
now
be
reviewed.
Employee
Recognition
Programs
Surveys
through
the
years
have
supported
the
importance
of
non-financials
as
an
effective
leadership
tool.
For
example,
a
survey
conducted
by
the
Society
of
Inventive
Travel
Executives
Foundation
found
that
63%
of
respondents
ranked
&dquo;a
pat
on
the
back&dquo;
as
a
meaningful
incentive
(Lovio-George,
1992).
In
another
survey
examining
the
value
of
65
potential
incentives,
four
out
of
the
top
five
rewards
ranked
by
employees
as
the
most
motivating
were
initiated
by
their
manager,
based
upon
performance,
and
required
little
or
no
money.
Although
the
surveys
all
define
non-financial
rewards
a
little
differently,
the
common
theme
is
that
they
do
not
cost
anything.
According
to
Graham
and
Unruh
(1990),
these
powerful
non-financial
incentives
can
be
operationalized
as
follows:
1.
A
manager
personally
congratulating
an
employee
for
a
job
well
done.
2.
A
manager
writing
a
personal
note
for
good
performance.
3.
A
manager
publicly
recognizing
an
employee
for
good
performance.
4.
A
manager
holds
morale-building
meetings
to
celebrate
successes.
Other
examples
of
non-financial
reward
systems
can
be
found
in
both
the
academic
and
practitioner
literature.
For
example,
Kerr
and
Slocum
(1987)
noted
that
organizations
which
recognize
and
respect
their
employees
tend
to
retain
their
35
workers
for
longer
periods
of
time
because
of
increased
loyalty
and
commitment.
In
actual
practice,
Nelson
(1995)
cites
the
effectiveness
of
Travel
Related
Services
(TRS)
&dquo;Great
Performers&dquo;
employee
recognition
program.
TRS
began
by
displaying
life-sized
posters
of
famous
people
performing
their
greatest
feats
throughout
the
company
for
many
weeks.
The
company
then
began
to
picture
TRS
employees
on
posters,
with
a
statement
of
a
major
accomplishment
by
each
employee.
The
effects
of
this
employee
recognition
program
were
very
positive.
According
to
TRS,
the
&dquo;Great
Performers&dquo;
program
has
helped
to
increase
the
company’s
net
income
by
500%
over
an
11
year
period.
In
addition,
the
company’s
ROE
since
the
program
began
has
been
28%.
Another
recent
real-world
example
concerning
the
effectiveness
of
employee
recognition
is
provided
by
Yaeger
(1998).
In
this
case,
Dierbergs
Markets
were
concerned
with
the
exceedingly
high
turnover
rates
of
their
employees.
To
combat
this
problem,
Dierbergs
implemented
a
formal
recognition
and
feedback
program.
As
a
result,
turnover
has
almost
been
cut
in
half
over
a
six
year
period -
from
50%
to
28%
currently.
According
to
Verespej
(1998),
Chevron
Chemical’s
recognition
program
has
also
been
very
effective.
At
Chevron,
the
&dquo;Bringing
Out
the
Best&dquo;
program
has
been
implemented
to
recognize
employees
immediately
for
a
job
well
done.
Employees
report
that
they
are
pleased
with
their
on-the-spot
recognition.
In
fact,
a
recent
survey
noted
that
90%
of
Chevron’s
employees
ranked
the
new
system
as
very
successful
or
good.
A
final
representative
example
is
provided
by
Boyle
(1996)
who
noted
the
value-
added
contribution
of
the
&dquo;100
club&dquo;
employee
recognition
program
implemented
by
the
Diamond
International
Corporation.
Since
formalizing
their
employee
recognition
system,
the
company
has
experienced
a
16.5%
increase
in
productivity,
a
48%
decrease
in
absenteeism,
and
a
41%
drop
in
industrial
accidents.
The
benefits
of
well
executed
recognition
programs
such
as
described
above
seem
clear.
Nelson
(1995)
provides
a
good
review of
some
characteristics
which
distinguish
an
effective
employee
recognition
program
as
follows.
1.
Recognition
should
be
immediate.
Recognition
should
be
given
as
soon
as
possible
after
a
desired
behavior
has
occurred.
Increasing
the
time
between
the
target
behavior
and
reward
devalues
the
reward
and
diminishes
the
reinforcement
value.
2.
Recognition
should
be
delivered personally.
The
power
of
social
rewards
derives
from
the
way
they
are
delivered.
The
fact
that
a
manager
is
taking
time
to
recognize
or
praise
an
employee
underscores
the
importance
of
the
activity
to
the
employee.
In
addition,
time
taken
by
peers
or
subordinates
to
recognize
a
job
well
done
can
also
be
very
effective.
In
fact,
these
types
of
upward
recognition
can
serve
as
even
greater
rewards
because
they
are
unexpected
and
not
required
of
the
colleague.
.
Recognition
should
be valuable.
Social
rewards
should
be
valued
and
meaningful
to
the
individuals
who
receive
them.
For
example,
some
employees
may
value
their
autonomy
and
would
prefer
to
be
thanked
in
private.
Other
employees
may
be
interested
in
having
the
recognition
highly
visible
to
increase
their
promotion
36
opportunities.
Finally,
some
may
prefer
rewards
that
recognize
the
team’s
or
group’s
contributions.
Whatever
the
case
might
be,
tailoring
the
rewards
to
the
needs
of
the
recipients
is
a
good
idea.
4.
Recognition
should
be
a
direct
reinforcer
of
desired
behavior.
In
other
words,
recognition
should
not
be
phony
or
given
superficially.
The
key
is
to
give
rewards
which
positively
reinforce
desired
behaviors.
Now
that
some
research
and
practice
highlighting
the
effectiveness
of
employee
recognition
has
been
given
and
some
useful
guidelines
for
delivering
employee
recognition
have been
outlined,
the
results
of
a
brief
survey
conducted
for
this
article
examining
the
importance
of
employee
recognition
in
a
large,
public,
not-for-
profit,
service
organization
will
be
reviewed.
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.
Survey
Results
Concerning
Employee
Recognition
The
~54
respondents
to
a
short
questionnaire
survey
on
reactions
to
a
proposed
recognition
program
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.
A
more
detailed
breakdown
of
the
survey
results
follows.
Need
to
Recognize
The
first
question
asked
the
employees
if
there
was
an
increased
need
to
be
recognized
for their
work
contributions.
In
general,
Table
1
shows
the
respondents
overwhelmingly
supported
this
idea.
In
fact,
243
of
the
254
respondents
(96%)
indicated
an
increased
need
for
recognition
was
necessary.
TABLE
1 -
The
Need
For
Employee
Recognition
Recognize
n
%
of
Total
Yes
243
96
No
9
04
The
results
here
are
similar
to
other
previously
noted
studies
which
confirm
the
value
of
employee
recognition.
As
discussed
earlier,
recognition
can
be
a
very
powerful
reward
for
employees.
Importantly,
few
people
become
satiated
or
filled
up
with
recognition.
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
outstanding
contributions
as
often
as
possible.
37
Criteria
The
next
question
asked
the
respondents
to
judge
the
criteria
for
which
someone
should
be
recognized.
Table 2
shows
that
the
findings
here
were
somewhat
varied.
Interestingly,
in
this
unionized
environment,
length
of
service
was
not
ranked
as
high
as
other
performance-based
criteria
such
as
quality
of
work.
TABLE 2 -
Criteria
for
Recognition
Criteria
n
%
of
Total
Quality
205
81
1
Performance
183
72
Work
Contribution
167
66
Service/Seniority
165
65
Other
~3 s
13
A
sampling
of
the
written
comments
falling
in
the
&dquo;other&dquo;
category
included
being
recognized
for:
&dquo;attendance&dquo;,
&dquo;outstanding
work,
timely
response
and
resolution
of
problems&dquo;,
&dquo;customer
service&dquo;,
&dquo;adding-value&dquo;,
&dquo;exemplary
demonstration
of
work
ethic&dquo;,
and
&dquo;willing
to
be
cross-trained
with
other
departments&dquo;.
In
reviewing
the
responses
and
written
comments,
it
appears
that
the
employees
responding
to
this
survey
prefer
to
be
rewarded
based
upon
objective,
measurable
criteria.
Therefore,
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.
Recognition
Type
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,
an
equal
number
mentioned
public
acknowledgment
in
the
newsletter
was
sufficient.
However,
most
interesting
were
the
written
comments
in
the
&dquo;other&dquo;
category.
Importantly,
the
respondents
indicated
that
social
recognition
rewards
were
highly
valued.
A
sample
of
the
written
comments
included
the
following:
&dquo;just
someone
saying
thanks&dquo;,
&dquo;more
respect&dquo;,
&dquo;a
nice
note&dquo;,
or
&dquo;a
letter
from
the
President
or a
personal
thanks&dquo;.
These
comments
reinforce
the
notion
that
social
rewards
such
as
attention,
recognition,
and
sincere
appreciation
can
be
very
powerful.
In
fact,
these
types
of
social
rewards
may
be
even
more
valued
than
tangible
recognition
rewards
such
as
gift
certificates
because
they
are
highly
personalized
and
more
meaningful.
One
comment
clearly
demonstrates
this
point,
&dquo;it’s
the
recognition
that
counts -
not
just
the
gifts.&dquo;
Therefore,
Recommendation
Three
would
be
to
provide
genuine
recognition
and
appreciation
for
desired
performance
behaviors.
One
overall
implication
for effective
leadership
from
these
survey
findings
would
be
to
realize
the
importance
of
utilizing
various
types
of
recognition
when
reinforcing
value-added
behaviors.
First,
formal
recognition
programs
should
reward
individuals
with
personalized
and
valued
incentives
such
as
gifts
or
personal
notes/letters.
More
importantly,
however,
leaders
should
also
be
trained
to
38
contingently
administer
social
rewards
on
a
conscientious,
day-to-day
level
to
identified
performance
behaviors.
In
addition,
these
rewards
should
be
positive,
instant,
and
specific.
This
is
not
to
suggest
that
phony
praise
should
be
given
or
that
the
social
rewards
should
be
indiscriminately
given,
but
to
make
sure
that
leaders
and
others
(peers
and
subordinates)
are
recognizing
and
positively
reinforcing
behaviors
that
have
been
identified
to
lead
to
performance
improvement
and
indirectly
retention
of
the
employee.
Conclusion
To
summarize,
the
growing
research
and
practitioner-oriented
literature
and
the
results
of
the
survey
reported
here
provide
considerable
support
for
the
importance
of
employee
recognition
as
an
effective
leadership
tool.
In
specific,
the
results
from
this
survey
have
indicated
that
employees
place
a
high
value
on
personalized,
specific,
and
instant
social
rewards
such
as
attention,
recognition,
and
sincere
appreciation.
Although
the
organization
surveyed
considered
that
it
was
already
recognizing
employees
for
their
work,
an
overwhelming
majority
of
employees
felt
that
more
recognition
was
highly
desirable.
The
data
also
revealed
a
preference
for
recognition
based
upon
efforts
which
contribute
to
organizational
success -
not
false
praise
or
automatic
length
of
service
recognition.
The
implications
from
this
survey
seem
apparent.
As
leaders
continue
to
look
for
ways
to
meet
the
productivity,
motivation,
and
retention
challenges
of
today’s
organizations,
the
increased
recognition
of
their
human
resources
must
be
of
primary
importance.
As
discussed,
employee
recognition
can
be
highly
effective
and
motivational
while
costing
the
organization
little
or
nothing
to
implement.
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
a
as
potent
tool
for
effective
leadership.
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