Gallup found that just one in three U.S. employees felt they’d received recognition for a job well done in the past week. That means many leaders are missing a huge (and fairly easy) opportunity to enhance employee engagement, retention, and culture. They don’t need to spend a lot of money on a rewards program for it to be effective—verbal or written praise often means much more than monetary rewards. Here’s how employee recognition plays an essential role in performance management and why you should evaluate whether you’re giving your own employees enough recognition today. 

Increasing job satisfaction

Without proper recognition, star performers will probably start looking for jobs elsewhere—with organizations that do appreciate their efforts. Gallup found that employees who don’t receive adequate recognition are twice as likely to plan to quit their job in the next year. Employees who receive recognition stay more engaged in their work and more satisfied with their jobs, which motivates them to continue improving their performance because they take pride in achieving more for their company.

Through the praise you give your employees, acknowledge the role they play in achieving the broader company vision and mission. By doing so, you’ll show them that they’re a vital part of the team who plays an instrumental role in its success. Providing clarity about how they’re affecting the direction of the company will give them the additional motivation that fuels performance improvement efforts.

Similarly, sharing appreciation for your employees helps you maintain a strong reputation as a company where employees enjoy working, which can enhance recruitment in the future!

Building employee confidence

Meanwhile, lower-performing employees won’t rise up to become stars if they don’t receive recognition for their smaller successes. A little recognition goes a long way toward motivating employees to reach higher. Rather than comparing them to your all-star performers, evaluate their individual progress. Where have they put in extra effort over the past month or taken steps to grow a skill? Show you notice even their small advances, and they’ll feel they have what it takes to strive toward more ambitious goals. By giving them positive feedback coupled with supportive guidance, you can help under-performing employees define a path to success. 

In some cases, employees might not even realize that they’ve improved in certain ways, and by praising them, you’ll be pointing out which behaviors they should continue strengthening. Remember, small successes serve as stepping-stones to star-employee status—but only if managers take the time to notice them.

Enhancing trust

A recent study showed that almost 90% of employees who received praise or recognition from their boss in the last month feel a high level of trust in their boss. Why? When a boss gives employees recognition for their hard work, they trust that their boss is observing their work and evaluating them fairly. They also trust that their boss cares about their personal growth and wants to nurture their development—which are all great reasons to share praise for your employees often! You’ll more effectively manage employee performance by building a high level of trust with them, as they’ll feel more inclined to follow the guidance you give them.

Preparing future leaders

To become leaders, employees need strong examples of how to encourage others to grow. By giving them praise where it’s due, you’ll be acting as a role model whose example they can follow. Show them how to effectively motivate and guide their direct reports with recognition for their hard work. Over time, you’ll instill a strong knowledge of this vital component of leadership.

Cultivating a positive workplace culture

Recognition should reward both results and behaviors. Rather than only praising the concrete results of projects, make sure to share your appreciation for employees’ clear communication, mentorship of peers, and other interpersonal skills. By doing so, you’ll cultivate a positive working environment for everyone, improving performance in the “soft skills” that are so essential for every job role. You’ll see employees sharing praise in all directions—not only from managers to direct reports but also from peers to peers and from subordinates to leaders. 


Share recognition in a memorable way. Try to give praise once a week, and once in a while, give employees a special form of recognition, such as praise at a company meeting or a personalized thank-you card. Taking the time to show you’ve noticed their steps toward improvement will make all the difference, playing a vital role in any performance management plan.