Employee recognition should not be seen as merely an act of kindness. It is most definitely not. Rather, it is both a communication tool and a strategic move that boosts and rewards the value your people have added to the business. In fact, when it is executed effectively, the actions and behaviours that were acknowledged will be repeated. In this sense, every organization should establish a strategic reward system which needs to fully scaffold the company’s corporate strategies and have four different core expressions; namely, compensation, benefits, recognition and appreciation.

If a reward system has any chance of being effective, it should be governed by a set of clearly-defined criteria: performance and behavior. The former, performance, is much less challenging to determine and gauge as it is linked to outcome delivery and goal attainment. The latter, however, might not be as straightforward. In order to reward specific employee behaviors, the organization should first determine which employee behaviors resonate with the company’s culture and needs. A few examples of acknowledgement-worthy behaviors are helping improve crucial corporate procedures, assisting colleagues in personal development and boosting customer relationships.

Turning to the different expressions of reward systems, the first and most coveted one is compensation. For a reward system to be strategic, though, leaders should ensure that any compensation given should correspond to strategic goal fulfillment. Furthermore, it could also be linked to more long-term oriented goals; perhaps in the form of equity.

The second expression of a truly strategic reward program is benefits. The problem with employee benefits is that leaders should ensure they offer a wide range of company benefits to stay ahead of the competition. Employees, especially those who are likely to earn benefits, do pay attention to what an organization is willing to offer.

The remaining two expressions – recognition and appreciation- are sadly overlooked. This is quite surprising as they are the most cost-effective ones and are likely to deliver high strategic impact. Recognition entails giving due public credit to employees who -through model behaviors- have shown exemplary work ethic. Similarly, appreciation entails thanking employees for outstanding performance and, thus, encouraging their peers to emulate the same behaviors. An effective strategic reward program could combine these two expressions by publicly thanking star employees and making clear references to the actions that lead to them meriting reward.

Source: https://www.entrepreneur.com/article/75340