Jobs & Unemployment

Beyond The Bonus: The Role Of Monetary Recognition Versus Appreciation In The Workplace

The idea that ‘cash is king’ has thrived in workplaces across the globe for centuries. Who doesn’t want to be fairly compensated for their hard work? In the United States, almost every employee would say they highly desire a competitive salary. However, money doesn’t solve all problems, specifically for employee satisfaction. As studies have begun to unravel the truth behind what employees want from their employers, managers are left to ponder whether they’re doing things right. While quarterly bonuses and compliments after closing a big deal are great, employee satisfaction and engagement will continue to drag if managers don’t implement a more balanced approach.

Harvard Business Review covered this topic at length, asserting that employees need recognition and appreciation. Many wonder, what’s the difference between the two?

As the Review outlines, recognition is conditional and most often received when performance is high. Everyone loves having their big wins celebrated, but if positive feedback only comes when they’re winning, employees may feel unsupported during their lows. Recognition can be anything from a bonus, award, promotion, or even a simple thank you. Managers believe these things are the way to create a loyal and highly productive employee.

According to studies, financial incentives can have adverse effects on employee productivity. Sometimes receiving a raise puts more pressure on an employee to perform, and that can cause them to feel overwhelmed. Additionally, a bonus or raise can reduce an employee’s inherent desire to find pleasure in completing their work.

This reality must be confusing for managers who have been utilizing a money-fueled motivation model for decades. However, since money is intertwined with emotional and physical well-being, it will always be important to employees. While it may not be the key to their heart, combining recognition with appreciation can provide managers with longer-lasting benefits.

An employee appreciation survey revealed that 53% of employees said more appreciation from their boss would prevent them from leaving their workplace. What’s even more surprising is that 68% said they already receive appreciation, highlighting that more would motivate them to put more effort into their work.

All employees need appreciation because they are human. Every person wants to feel that they add value through their unique contributions. When a manager appreciates an employee, they’re not highlighting their achievements. They could simply remind them that their positive demeanor and helpful spirit make a real difference at work. Managers often feel that these compliments, along with one's around job responsibilities, are too obvious to be needed. The person was hired for a position and they do their work. Why would they need to know that I appreciate that? The answer is simple: Everyone prefers working for employers who express their appreciation to those who don’t.

Dr. Steve Steff, the Founder and President of Transforming Leadership, an executive coaching and leadership consulting organization, says that most managers struggle to reward their employees accordingly. Steve has decades of experience in entrepreneurship, public speaking, counseling, and psychology. He utilizes his C-Suite expertise to guide other leaders to improve.

Since founding Transforming Leadership and working with hundreds of businesses, Steve has noticed the effects of appreciation and recognition.

“Companies often use a raise in an attempt to increase employee engagement, but this rarely works,” says Steve. “While money is a factor in job satisfaction, research finds that culture is as important as pay.”

When working with clients one-on-one and hosting workshops, Transforming Leadership instructs managers to give frequent affirming feedback. Instead of catching their staff doing something wrong, Steve suggests finding one thing daily to express appreciation for. It can be something as simple as employee punctuality.

These actions build trust and loyalty. Steve likes to think of employee-employer relationships as a deposit and withdrawal system. If you haven’t built equity through frequent appreciation, you can’t afford to withdraw through negative feedback.

Just like any other relationship, strong communication is foundational to success. Appreciation is the best way to inspire employees to give more than the bare minimum they need to keep their position. Steve knows that it can be difficult to add appreciation to their everyday tasks, but he also notes that balance is needed.

“If managers can only communicate the downfalls of an employee’s behavior, staff will eventually tune out their feedback,” says Steve. “The relationship between the manager and their employees will also be eroded as staff will no longer trust someone who only tells them what they’re doing wrong and never comments on what they do right. When appreciation becomes part of a manager’s daily habits, employees and the business will prosper.”

Transforming Leadership’s No.1 Proverb states “ People perform best for those they care about, and for those that care about them.”

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.