How to Create an Efficient
Employee Appreciation System

An appreciation system is a complex of incentive measures that motivate employees, encourage their engagement, and increase their loyalty to the company. They can be focused on different aspects of productivity, performance and development of skills, but the final goals are achieving better work results and retaining talents.

Traditionally, employee appreciation programs have been a feature of medium to large companies. Small businesses and startups typically have been skipping this step of HR policy due to limited organizational and financial capacities. However, today more and more small companies are implementing appreciation systems for their employees, as the results tend to justify the costs.

So, why create an employee appreciation system?

Being valued and recognized is one of the most important drivers of employee’s productivity and motivation. A reward program allows an employer to show recognition to those who produce value for the company – and motivate those who are at an average level to go the extra mile. Just to sum up, the major effects of implementing a recognition system are:

  • Increased retention;
  • Higher productivity;
  • Improved morale;
  • Healthier work environment;
  • Comfortable office culture.

Besides, depending on the perks offered as part of a recognition program, there can be such direct benefits as the overall growth of professionalism. For example, if a company offers education opportunities or tickets to professional events as a reward, it contributes to the professional development of the employees.

Getting off the ground

If you’re new to the HR world, it might be difficult to configure and create an employee appreciation system that would work for your team. If your company’s resources are limited, this complicates things even more. But in reality, there are solutions for any teams and any budgets. The key point here is to create a plan and commit to implementing it.

  • Identify your goals. What are you intending to achieve with an employee appreciation system? Is it a more comfortable work environment, or any performance metrics, or a better retention rate?
  • Set the metrics and describe the behavior that you’ll be rewarding. Define how you’ll be measuring it. If it’s productivity metrics, turnover rate or attendance figures, it’s easy to collect the related data. Measurements might be a bit more complicated if it’s about office culture, workplace environment etc. – here’s where polls and feedback help.
  • Calculate your budget. It’s a well-known fact that some small businesses can be on a tight budget, but practical experience shows that the costs of basic appreciation actions are close to zero – for example, a shoutout of top performers at the company’s website. So, calculate how much you can afford to spend on an appreciation system per month, quarter, or year, and plan accordingly.
  • Learn more about your employees’ preferences. Run a poll or ask people for feedback on what they find motivating in their work, besides salary and basic benefits package, and analyze the answers.
  • Create ideas of perks within your budget that will actually motivate the employees. Besides asking the employees themselves and seeking inspiration on the Internet, you can contact someone from your professional network for practical advice.
  • Prepare a plan and put it in writing. When deciding what exactly you’ll include in your appreciation program, align each step with your general goals. Also, make sure that the measures you’ll be implementing are timely, visible, and inclusive.

Follow the plan you’ve created, and measure the dynamics to see whether any changes are necessary. Also, don’t forget about collecting employees’ feedback on existing recognition steps and the way they are implemented, and find ways to make your appreciation system more efficient.

Elements of an employee appreciation system

There’s no general rule on what perks and bonuses should be included in the appreciation program. However, there are practices of using specific elements for recognition and motivation. You can combine them depending on what goals you want to achieve, and adapt them to your specific workplace conditions. Here’s a list of the most commonly used ones:

Written/ verbal praise. This is the most basic appreciation method, and it’s affordable for any company. Praises can be private, like an email or a card from manager, and public, such as a shoutout at a meeting or on the corporate website. Praises work for any types of employees, and the method – written or verbal, private or public – can depend on the value brought by the employee to the company. For example, private recognitions are reasonable for a personal achievement like extraordinary performance or new skills mastered in short time, and things like introducing an innovative approach or finding a way to reduce manufacturing costs deserve a public praise.

Bonuses and monetary rewards. Used mostly for sales and management staff, they are intended to motivate employees to achieve target KPIs, and often represent a share in earned revenue.

Promotion and professional development opportunities. This part of a recognition program is targeted at qualified workforce and works as an efficient way to retain talents and get more value from their efforts. The professional development part implies paying for courses and learning programs, or providing tickets to professional conferences. While being not the most affordable one, this perk brings massive mutual benefits to employees and employers.

Gamified recognition programs. They can be implemented in a thousand different ways: earning points for hard work, receiving badges for hitting milestones etc. These programs create a friendly competitive environment, help achieve set goals sooner, and create camaraderie on the team.

Celebrations of achieved milestones and reached goals. This part of an employee appreciation program is intended to show the importance of common goals and the value of each team member’s effort in achieving them.

Typical mistakes

As hard as you work on an employee appreciation system, the positive effect of introducing it can be ruined by a mistake committed during planning or implementation. Let’s go through the most common mistakes that can be detrimental for the appreciation program, and see how they can be avoided.

Not aligning the perks and rewards with the goals. Always keep in mind what goals you’re planning to achieve with an appreciation system, and answer the questions when choosing appreciation methods: what behavior would it encourage? How motivating is it for specific person or the entire team? Would it make people feel valued?

Disregarding employees’ preferences. Not collecting opinions or collecting feedback but not actually using it has different negative consequences. First, you fail to achieve what you’ve aimed at: making employees feel valued and recognized. Second, people on the team feel ignored – which is definitely bad for team spirit. Carefully collect feedback from your team members, and use it (within reasonable limits) for planning specific steps of your recognition policy.

Not personalizing the benefits. It’s indeed hard to come up with an individual appreciation strategy for each employee, but there’s something you can do to make the benefit more personal. For example, where one would prefer a monetary bonus, the other would appreciate an additional PTO day. Ask your team members what they’d prefer, and do your best to introduce the benefits that actually work.

Allowing disproportional rewards. Rewarding a significant revenue increase or a new workflow that increased work efficiency with just a verbal “thank you” is actually possible in small teams and startups, but when done regularly, it will most likely seem unfair. The opposite – offering large-scale perks for minor achievements – is not a reasonable investment. Consider the value of the rewarded achievement for the company and the team, and choose proportional rewards.

Not being inclusive. Offering bonuses that not everyone can make use of? Most commonly, this applies to appreciation programs that don’t include personalized bonuses. It’s not unheard of, say, offering paid gym membership to those who are not into sports – just because it’s the default perk. Make sure you’ve heard everyone on your team about еру benefits that motivate them, and do your best to personalize perks you’re offering.


We are well past the times when HR costs went directly to the “unaffordable fancy perks” pile. Today, employee appreciation systems are introduced in teams of any size. They don’t need to be expensive – even a garage-based startup can come up with a strategy to motivate employees and retain talents. To create an efficient policy, carefully analyze your goals, listen to the team members’ feedback, and adjust possible solutions to your specific workplace environment.


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