Recognition programs and other ways of increasing an employee’s intrinsic motivation work. An employee recognition program is a plan to encourage specific behaviors by formally appreciating employee contributions. This may range from a spontaneous and private thank-you to widely publicized formal programs. As companies and government organizations face tighter budgets, nonfinancial incentives become more attractive.

Research suggests that financial incentives may be more motivating in the short term, but in the long run nonfinancial incentives work best. Surprisingly, there is not a lot of research on the motivational outcomes or global use of recognition programs. However, recent studies indicate that employee recognition programs are associated with self-esteem, self-efficacy, and job satisfaction, and the broader outcomes from intrinsic motivation are well documented. An obvious advantage of recognition programs is that they are inexpensive: Praise is free! With or without financial rewards, they can be highly motivating to employees.

When applied to jobs for which performance factors are relatively objective, such as sales, recognition programs are likely to be perceived by employees as fair. In most jobs, however, performance criteria aren’t self-evident, which allows managers to manipulate the system and recognize their favorites. Therefore, where formal recognition programs are used, care must be taken to ensure fairness.