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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?

Most organizations look to reward and recognize employees to boost their motivation and commitment. However, 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.

Sentiment Analysis

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”.

What is the Impact of Rewards and Recognition on Employee Satisfaction?

Customer Experience

Regarding employee engagement strategies, rewards and recognition are among the most effective. Here’s why:

1. Timely rewards and recognition help improve employees’ engagement, motivation, and commitment and drive workforce productivity and efficiency.

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

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

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 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 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 the quality of deliverables.

3. Poor Collaboration among Employees

How to make Employee Recognition Fun and Wacky

Employee recognition also plays a vital role in fostering better coordination and cooperation among the workforce.

If employees are appreciated for their excellent 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 denied recognition by their employers vent their frustration differently.

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 low trust levels and poor 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, an organization’s employer brand value helps prospective candidates decide 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’s inability to hire top talent.

What are the Common Reasons why organizations do not have Employee Rewards Programs?

Several reasons might prevent organizations from investing in a good employee rewards program.

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 adequately implemented employee rewards and recognition program:

Common Reasons why organizations do not have Employee Rewards Programs

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 incorrect, as effective employee rewards and recognition programs can be designed with limited resources and budgets.

2. Too Much Effort


Another common misconception is that reward programs are extremely time-consuming.

It is not entirely 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 In Current Situation

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 critical 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.


The 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 their workforce’s needs and expectations.

Sagar Chaudhuri

Lead author: Sagar Chaudhuri, the Co-Founder and CEO of HiFives. He is an HR Tech Evangelist with over 25 years of corporate and entrepreneurship experience. In the past, Sagar has worked in leadership roles with companies such as Genpact, Infosys, and ICICI Bank. 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.