Recognition is one of the most powerful tools that leaders can use to boost morale, foster a positive culture, and drive overall performance. It goes without saying that employees who feel valued and appreciated are more engaged, productive, and loyal. But when it comes to recognition, one size does not fit all. Understanding how both formal and informal recognition is an effective way for leaders to keep their teams engaged and valued.

In my professional experience, recognition and appreciation is often overlooked by leaders – so I wanted to explore the nuances of these two types of recognition and provide guidance on how to integrate both into your people strategy.

What is Formal Recognition?

Formal recognition typically involves structured programs or events that are planned, budgeted, and aligned with company objectives. This type of recognition is often public and follows specific guidelines to ensure consistency across the organisation.

Examples of formal recognition include:

• Annual awards ceremonies: Recognising employees for their achievements over the year, often with trophies, certificates, or monetary rewards.
• Milestone celebrations: Acknowledging work anniversaries, project completions, or significant contributions with a formal event or reward.
• Employee of the Month programs: Offering a prestigious title and associated benefits to employees who stand out for their performance.
• Performance-based bonuses: Financial rewards tied to an employee’s performance metrics or achieving specific company goals.

Benefits of formal recognition:

• Visibility and prestige: Formal recognition often occurs in front of peers and leadership, offering employees public acknowledgment.
• Consistency and fairness: When criteria are clearly defined, formal recognition ensures fairness and avoids bias.
• Motivates high performance: Formal recognition often comes with tangible rewards, which can drive employees to excel.

However, because formal recognition tends to happen on a set schedule or for major accomplishments, it may not always capture the day-to-day contributions that also deserve appreciation. This is where informal recognition comes in.

What is Informal Recognition?

Informal recognition is spontaneous, often personalized, and usually doesn’t involve elaborate ceremonies or big rewards. It’s a more flexible and frequent way to express appreciation for an employee’s efforts or behaviour, typically occurring in the moment.

Examples of informal recognition include:

• A simple “thank you”: Verbally acknowledging an employee’s hard work on a specific task or project.
• Team shout-outs: Highlighting an employee’s contribution during team meetings.
• Handwritten notes: Personalising appreciation with a note or card to an employee.
• Social media posts: Recognising employees on internal communication platforms to share their achievements with the broader team.

Benefits of informal recognition:

• Timely appreciation: Informal recognition happens in real-time, making it effective for acknowledging small, everyday wins.
• Builds stronger relationships: Personalised, informal gestures show genuine care and foster stronger employee-manager relationships.
• Cost-effective: Since informal recognition doesn’t typically involve monetary rewards, it’s an affordable way to keep employees engaged.

However, informal recognition may not always carry the same weight or prestige as formal recognition, and if not done consistently, it can lead to perceptions of favouritism or neglect.

Balancing Formal and Informal Recognition

To create a truly engaging workplace, leaders should aim for a balance between both formal and informal recognition approaches. Each serves a unique purpose and caters to different employee needs and circumstances.

What methods do you use to recognise your team?

Recognition in the workplace is a powerful driver of employee engagement and satisfaction. If you think this is an area of your organisation or people strategy that requires more attention, reach out to Resolve to assist you in implementing meaningful recognition programs for your people and your broader business goals and objectives. 

Nick Hedges is the founder of Resolve HR, a HR consultancy specialising in providing workplace advice to managers and business owners. He recently published his first book, “Is Your Team Failing Or Kicking Goals – Take Control of Your People & Their Performance”. It is a practical response to the most pressing HR challenges, which can be found at https://resolvehr.com.au/.
 
Disclaimer: The contents written do not constitute legal advice and does not cater for individual circumstances.   The information contained herein is not intended to be a substitute for legal advice and should not be relied upon as such.