Why an “Employee of the Month” Program Might Be Wrong For Your Business

There’s no denying that high-quality employee recognition programs like “Employee of the Month” really work. According to a Bersin by Deloitte study companies with recognition programs that effectively improve employee engagement have a 31 percent lower voluntary turnover rate than those who promote ineffective recognition programs.

Furthermore, organizations with strategic recognition programs show 28.6% lower frustration levels than companies without recognition programs.

But are “Employee of the Month” programs really a good idea? It’s true that this is a recognition method that companies have been using for years; one that’s very popular among retail and healthcare businesses especially. In some companies, people swear by this program while in others nobody takes it seriously.

Contemporary human resources and employee engagement experts tend to agree that this type of recognition program is fairly outdated and ineffective when implemented for most modern businesses. Here’s why:

Infrequent Recognition

If you’re running a tiny coffee shop with six employees, then an “Employee of the Month” program might not be such a bad idea, considering that you’d be able to award each employee twice a year.

But what if you run a business that has 50 or more employees? It could literally be years before every one of your employees is recognized. Just about every study on the subject has shown that when it comes to effectively praising your employees, regular and constant praise, no matter how small, tends to have a much better overall effect when it comes to improving employee morale and engagement.

Not only is praise and recognition infrequent with an “Employee of the Month” program, it’s also far too non-inclusive.

Teams Are Not Recognized

In most companies, it’s a group of people who achieve a goal, not an individual. Imagine a group of employees working on a project and only one of them gets rewarded. This can cause two very serious problems within the dynamics of your team: it can promote very unhealthy rivalries and competition among your staff and even worse, it can make people feel as if they are being left out altogether.

Business achievements are very rarely the result of the effort put forth by one person in particular. Why then would you single out one person if everyone, or at least multiple people, was involved in successfully realizing a project?

The fact that you are singling out one person and subjectively naming them the “best employee” of the month, can lead to not only resentment within the team but also to unhealthy competition that could turn your employees against each other when the actual purpose of doling out praise and recognition is to encourage team unity and employee satisfaction.

Why risk demotivating multiple employees in the effort to motivate a single staff member?

The Criteria is Commonly Convoluted

One of the biggest problems that plagues the “Employee of the Month” program is that the criteria is often not very clearly defined. If you clearly state that you are awarding the person in your retail store who makes the most sales, then people will know what to aim for and why the award is being handed out. But there are few instances in business in which goals for such recognition can be so clearly defined.

For the most part, the “Employee of the Month” award is given according to a subjective feeling of the manager of who he or she believes performed at the highest level over the course of the month.

When your employees have no idea what the award is based on, it can become increasingly difficult on them, especially if months are passing and they are being skipped over each month and have no idea what they need to do in order to become “Employee of the Month.”

This is the main reason why many people, including Harvard Business School Assistant Professor Ian Larkin, believe that “Employee of the Month” programs can end up demotivating your entire staff very quickly.

It Can Destroy Company Culture

Engaging and motivating your workers is one of the most important facets of building a positive and productive work culture. When doing so, you want to create a culture in which your employees are motivated to work hard for the right reasons. Your staff should be motivated by making customers happy and seeing the business grow. If their sole motivation is being recognized as being “Employee of the Month,” you’re creating a culture in which this type of personal recognition is prioritized over team success.

Essentially, these types of programs facilitate a culture in which your employees are motivated to be recognized as being somehow better or on a higher level than the rest of your staff. It’s a counterproductive method of motivating and engaging your staff, in the end.

As a manager, you should be promoting a culture in which employees understand greater business goals and work together to achieve them, because when these goals are achieved, everyone wins – not just the “Employee of the Month.”