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Can Lack of Employee Recognition Program hurt an Organization?

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Can Lack of Employee Recognition Program hurt an Organization?

The success and growth of an organization are closely linked to the level of motivation and commitment of its employees. Hence, organizations implement a wide range of HR Policies to enhance the overall satisfaction levels of their workforce. These can range from providing more flexible work schedules to improving workplace culture and rewarding and recognizing employees. Hence, in this context, organizations need to find an answer to the question: ‘Can the lack of an employee recognition program hurt an organization’? 

A study by Workhuman Institute (erstwhile Globoforce) found that despite understanding the importance of employee recognition, only 14% of organizations provide their employees with the necessary tools for the same.

In a survey conducted by Psychometric, when the participants were asked what leaders could do more to improve engagement, 58% of respondents replied: “give recognition”.

Impact of Rewards and Recognition on Employee Satisfaction

Customer Experience

Of the employee engagement strategies, rewards and recognition are deemed to be one of the most effective. Here’s why:

1. Timely rewards and recognition help in improving engagement, motivation, and commitment of the employees, and driving workforce productivity and efficiency.

2. It gives employees a sense of belonging and purpose and also strengthens their commitment and loyalty towards the organization.

3. A good rewards policy impacts the workplace culture besides promoting better cooperation and coordination between members of the workforce.

How can a Lack of Employee Recognition Program hurt an Organization?

Despite the growing significance of rewarding and recognizing employees, several organizations still do not have such programs.

Such organizations may lose the dedication and loyalty of their employees and can even see lower growth. The most significant disadvantages for organizations lacking a good rewards program are as follows:

Most significant disadvantages for organizations lacking a good rewards program

1. Falling Employee Retention

Early Bird

The increasing competition in the job market has already made attracting and retaining talented professionals quite challenging for organizations. The lack of an appropriate recognition policy makes things even more difficult for an organization.

Best-performing employees most often want their employers to acknowledge their achievements and appreciate their contribution to business growth. Hence, not fulfilling this basic human need can make it difficult for organizations to retain their top talent.

2. Drop in the Employee Efficiency and Productivity


When organizations fail to recognize their employees, they make them feel unvalued. They start developing doubts about their performance, which can impact their self-confidence and future performance.

Consequently, this can impact overall productivity and business growth. Such employees might be less committed to project deadlines or even the quality of deliverables.

3. Poor Collaboration among Employees

How to make Employee Recognition Fun and Wacky

Also, employee recognition plays an important role in fostering better coordination and cooperation between the members of the workforce. If employees are appreciated for their good work and achievements, they are more likely to help and support their colleagues.

However, when employees are not recognized for their efforts, they tend to become more withdrawn and uncooperative with others. Moreover, their reluctance to complete their work on time or to address performance issues also leads to poor workplace coordination.

4. Negativity and Discord at the Workplace

Impact of Fun @ Work Activities on Employee Engagement

In many cases, employees who are denied recognition by their employers vent their frustration in different ways.

Employees of such organizations might have frequent altercations with their co-workers, or might even indulge in badmouthing the organization. Hence, this can lead to poor trust levels and social interaction at the workplace which in turn impacts productivity.

5. Drop in the Employer Brand Value

Case Study: Employee Recognition at a Financial Services Company

Also, the employer brand value of an organization helps prospective candidates make an informed decision about joining the organization. Organizations without an effective rewards program tend to be perceived by prospective candidates to have lower employer brand value.

The lack of an employee recognition program may be a reason for the organization not being able to hire top talent.

What are the Common Misconceptions about Employee Rewards Programs?

Several reasons might prevent organizations from investing in a good rewards program for their employees. In most cases, these reasons manifest themselves in the form of various misconceptions that organizations tend to have.

So, here are a few of the most common misconceptions that prevent organizations from utilizing the benefits of a well-developed and properly implemented employee rewards and recognition program:

1. Too Expensive

Monetary Rewards

Organizations often believe that rewards programs are quite expensive and can cause a major dent in business profitability. However, this is not correct as effective employee rewards and recognition programs can be designed with limited resources and budget.

2. Effort Intensive


Another common misconception is that reward programs are extremely time-consuming. It is not completely true that setting up a good rewards program requires a considerable investment of time and effort. Once a properly designed program is set up, it is easy to execute without much administrative and management overheads.

3. Irrelevant Currently

Seven traits of highly engaged employees in an organization

Many organizations feel that employee recognition programs have lost their relevance during this current economic downturn. However, recognizing employees is more important than ever in the present situation.

Also, organizations need to adopt new recognition methodologies to appreciate and acknowledge the efforts of their remote-working employees.


Lack of an employee recognition program can hurt an organization as it is one of the key HR strategies for motivating and engaging employees.

Hence, organizations should implement robust employee recognition programs to meet the business needs and expectations of their workforce.

Sagar Chaudhuri

Lead author: Sagar Chaudhuri, the Co-Founder and CEO of HiFives. He is an HR Tech Evangelist with over 25 years of experience in the corporate world and entrepreneurship. In the past, Sagar has worked with companies such as Genpact, Infosys, and ICICI Bank, in leadership roles. He has an engineering degree from IIT Kharagpur and an MBA from IIM Lucknow. Connect on LinkedIn

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HiFives is a global employee rewards, recognition and engagement SaaS platform that enables organizations to digitize, automate and transform their employee experience. It is used by 100+ large enterprises, small businesses and startups in manufacturing, retail, technology, financial services and media, across 25+ countries.