Should your organization offer a formal or informal recognition program — or both?

A recent survey of nonprofit HR association WorldatWork’s members found that 89 percent of companies have employee recognition programs in place—which can include manager and peer appreciation, spontaneous celebrations and other elements.

Nineteen percent of organizations said they had a formal recognition program, a 5 percent drop from 2013; seven percent said they had an informal recognition program, and 75 percent structure their recognition programs to include both formal and informal components.

Formal vs. Informal    

A formal employee recognition program—a structured system recognizing attendance, safety or other achievements—can help ensure regular efforts are being taken to express employee appreciation.

Formal recognition programs can also be useful for companies with remote locations because they standardize the way employees will be recognized, instead of leaving the methods and frequency up to each site.

Nearly half—46 percent—of organizations told WorldatWork their international employees participated in either all, most or a few of the same recognition programs as North American employees. Only a quarter of organizations said their global employees solely maintained their own separate recognition programs.

An informal program, on the other hand, generally centers on more spontaneous employee thank-you efforts.

Informal recognition programs can present a risk; recognition efforts may not be consistent, particularly in times of growth when HR professionals are pressed for time, due to an increased focus on hiring—which can negatively impact employee retention.

However, because managers often directly determine informal recognition recipients and rewards, the approach can provide a more personal thank-you and offer immediate results.

Employees are recognized shortly after completing a task, instead of having to wait for the next employee-of-the-month decision or quarterly award. (For suggestions, check out the Canadian HR Council for the Nonprofit Sector’s informal employee recognition ideas.)

Establishing the Perfect Employee Recognition Program

Formal and informal approaches both offer various advantages—one reason many organizations, including  the nonprofit Incentive Research Foundation, which provides research and education for the global incentive and recognition industry, recommend utilizing both formal and informal recognition programs to, as IRF says, build “a culture of recognition.”

Creating a recognition program that supports your company culture can be a daunting task. The following steps can help make your efforts an employee satisfaction success:

Align your recognition program with your overall goals: Tying your employee recognition program to your company’s business strategy, rewarding behaviors that can positively affect your value, can help make the program a more effective employee retention and development tool, according to IRF.

For organizations that offer a recognition program, the most popular types acknowledge length of service (87 percent of organizations), exemplary performance (76 percent) and involve programs designed to motivate specific behaviors (51 percent), according to WorldatWork.

Plan and promote your program effectively: HRZone recommends involving employees in recognition reward choices to ensure you provide the informal and formal recognition program incentives recipients want. The HR industry publication also notes that it’s important to clearly communicate the program’s parameters and success stories, using whatever medium your audience will best respond to. (Email and Intranet options are the most popular communication choices, according to WorldatWork’s 2015 survey).

Make sure program administrators are prepared: An employee recognition program’s success depends on its execution. Training managers to ensure they know how to dispense recognition-related awards can help the program run smoothly — and inspire employees to meet higher performance levels, according to Inc.

Even informal recognition programs need some structure: To avoid employee recognition efforts falling by the wayside, Workforce magazine recommends establishing a group to create an annual recognition schedule, and appointing team members to oversee each month’s initiative.

Evaluate how your employee recognition program is working: Employee satisfaction surveys were the most popular way to gauge recognition programs’ success, according to WorldatWork; 62 percent of organizations used them. Fifty-one percent measured program participation and/or usage rates.

Organizations with tight budgets may believe they can’t afford to institute an employee recognition program, with either informal or formal recognition program elements. Chances are, however, you also can’t afford to lose a large number of employees due to disengagement, resulting reduced productivity levels and other factors.

If you’ve been thinking about adding a formal or informal recognition program, find out 10 inexpensive methods — ranging from awards to educational opportunities — that can help your company implement an affordable option.