A significant issue that continues to impede modern organizations is the troublesome drain of financial and human resources due to employee churn. Employees do not want to work for organizations that do not value their efforts, and nurturing loyalty has become extremely pivotal for the survival of a company. This blog aims to explore other avenues of retaining valuable employees, other than the traditional method of hikes and appraisals.

“Recognition is so easy to do and so inexpensive to distribute that there is just no excuse for not doing it" - Rosabeth Moss Kanter.


Traditional methods of management

One of the primary responsibility of a leader is to motivate and encourage superior performance from all his employees. However, these motivation approaches often are focused on achieving the desired outcome. Some examples of these approaches like expectancy theory and reinforcement theory demonstrate how they are heavily biased towards a transactional relationship between rewards and performance.

However, these approaches were implemented to aid the managers of a bygone era where a successful manager was defined as the one who gets promoted within the shortest amount of time, and anything and everything they did to achieve this goal was applauded as a good management practice. In those times, employees were treated as resources, and the reason was they companies could afford to do it. There was no case scenario where adhering to employee sentiments would improve profitability, and those companies that did it were being altruistic.

Demands of a modern workplace

This practice cannot be farthest from wrong in a modern day case scenario, where the times have changed, and customer centricity is the primary driver of everything within an organization.

Customers have become more educated, and a plethora of employees are now in customer-facing roles, directly representing the face of the organization. As a manager, it not only is critical to focus on the bottom line but also to reflect deep care into employee sentiments.

In the modern workplace, the demands of the contemporary leader can be categorized as 

  • Getting the job done through high-quality standards
  • ‍Getting the job done through people while ALSO ensuring their satisfaction and commitment
  • Taking a personal interest in employee needs and contribution‍
  • Making employees feel valued and motivated.

Monetary and Non-monetary incentives

Monetary incentives

Generally, there are two types of incentives that leaders can leverage to enhance performance positively, the first being monetary incentives. A pay hike plays a pivotal role in reinforcing positive behaviors. Doing reflects especially true in teams where the bonus is directly proportional to the achievement of a particular metric. However, an increase in salary does not necessarily ensure, employee motivation or engagement, and might instead even reinforce the transactional dynamic between the organization and the employees.

Non-monetary Incentives

Though the effectiveness of monetary incentive does reinforce short term performance outcomes. It is imperative for organizations to seek to provide their employees with non-financial rewards such as recognition and attention. It is proved to be efficient because, it does not cost anything, and is available for everyone to use.

“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."- Harvey Stein President, Sten & Read Incentives.


Recognition as a replacement for monetary compensation

Recognition is one of the primary elements of employee motivation. It encourages the contribution of best efforts to enhance business performance and innovation. The concept of praise as a substitute for monetary compensation has been since 2010.  Employees tend to give their maximum when they feel trusted and rewarded by the management. However, there are a plethora of factors that may influence their performance ranging from working conditions, relationship with the employer to job security and rewarding procedures. Non-monetary reward seems to be a fundamental metric that affects work performance.

Non-financial rewards are a non-cash and social recognition such as acknowledgments, badges or certificates of genuine appreciation. The secret to achieving desired performance from an employee is to help them realize the mutual gain of themselves and the organization. The manager must be cautious while setting the rewards system to encompass performance at all levels.

Continuous performance management involves both, goal setting for alignment and recognizing and rewarding for performance which is both intrinsic and extrinsic.

Effective recognition strategies

There are multiple ways in which employees can be recognized without monetary compensation; these could include letters, postcards, mugs or just anything that lasts longer than cash. These trophies help your employees tie their success to something meaningful and use them as an intrinsic motivator to perform better next time. However, digital recognition that can be ascribed anytime can also be strong and powerful motivators for performance. Having a badge named with your employee and giving hem a title can be provided for many reasons including for a job well done, a birthday, a service anniversary or completing an arduous task. In essential it’s a digital prize etched in ink that thanks them for saving the company time and money.

Effective recognition strategies must also include public and transparent praises. The primary factors to give great recognitions are about making them sincere, timely and specific. This understanding suggests that managers must be open enough to try out new things with varied forms of recognition and rewards by adding new bonuses and eliminating the old ones. One way to keep the rewards refreshing is to give Seasonal rewards that can be used within a specific time; this practice also sets a pseudo-timeline for acquiring it, while also establishing the permanence of such a success which cannot be outdone.

Criteria for recognition

If you expect recognition to provide the expected results, as on organization you need to commit the attention, time and resources toward it, managers need to create goals and plan that asses the behaviors and accomplishments which warrant rewards within a business.

An essential factor to be incorporated in giving recognition is to be timely and relevant. It should include a context of goal alignment, open communication, trustworthiness, and accountability. A sound recognition effort should make explicitly clear the attitudes and behaviors recognized by the business. It helps improve performance when recognition also represents personal value. By personalizing a reward, a company communicates the extent to which the employee is deemed valuable. A simple “Thank you” from a respected person at the right time is an essential factor in the personal and professional growth of an employee. Best recognitions are given out to teams or individuals.

Recognition to drive high output

Here, I would like to take a page from andy grove’s High Output Management, and the chapter on "shaping the field". Here, Grove talks about, how the manager, like the course of an athlete, should shape the area and enable the employee to find their intrinsic motivators which help them pursue their goal. This encouragement allows them to not only break from their limits but also improves the manager realize the maximum capability of every contributor. This, in turn, can help you recycle high achievers and not promote them too fast.

"Start with good people, lay out the rules, communicate with your employees, motivate them and reward them. If you do all those things effectively, you can't miss." - Lee Iacocca


Rewards and recognition, bring a culture of appreciation within an organization. This helps bring a sense of oneness and camaraderie, which spreads throughout. It helps everyone acknowledge the value and contribution provided by each other.