Keeping employees motivated is a never-ending challenge—especially for small and midsize businesses, where leaders often wear multiple hats and juggle day-to-day operations alongside their HR responsibilities.

Still, bringing out the best in each employee isn’t optional. It’s essential for sustainable business success.

That’s where meaningful recognition comes in. It’s one of the best ways to motivate employees, with 37% of employees saying recognition is the most effective motivator for great work.

So what does meaningful recognition actually look like? And how can SMBs tailor it to meet the needs and preferences of their people?

Get all your motivation-related questions answered below—and see how, with the right recognition software, motivating your workforce is not only possible but practical.

What is employee motivation?

Employee motivation refers to how committed, enthusiastic, and energetic people are as they work. It drives actions, decisions, and effort and directly reflects employee productivity, engagement, and overall contributions.

In general, there are two types of motivation to be aware of.

Intrinsic motivation

This is when employees find enjoyment and purpose in their work. Intrinsic motivation grows when employees are trusted with ownership, see how their work matters, and feel recognized for the impact they create—not just the tasks they complete.

Examples include: 

• Giving employees ownership over projects and decision-making, so they see the direct impact of their work
• Publicly recognizing how an individual’s work helped a customer, improved a process, or made the team’s day easier (something that’s easier to see and celebrate in smaller teams)
• Providing opportunities to learn new skills or grow into roles that align with personal interests

Extrinsic motivation

Extrinsic motivation occurs when employees are motivated by external factors, such as rewards or monetary compensation.

Examples include: 

• Offering performance-based bonuses tied to clear, achievable goals
• Using spot rewards or points programs to reinforce specific behaviors (e.g., collaboration, innovation, customer service)
• Providing tangible perks such as gift cards, stipends, or experiential rewards
• Running short-term incentives during peak seasons, big client launches, or all-hands-on-deck moments—without committing to permanent bonuses 

Intrinsic and extrinsic motivation may sound like opposites, but that’s where employee motivation recognition comes into play. Meaningful recognition, while an extrinsic motivator, can provide employees with more enjoyment and purpose at work, building their intrinsic motivation.

Learn more about incentives that improve motivation.

The impact of employee rewards and recognition on motivation

Employee motivation is strongest when people feel both rewarded for their effort and recognized for their impact. 

While rewards and recognition are often grouped together, they motivate employees in different ways:

• Employee rewards increase motivation by incentivizing performance or completion of work that may not be inherently fulfilling. They provide clear, extrinsic motivation tied to performance.
• Employee recognition, on the other hand, fuels intrinsic motivation. By expressing appreciation and highlighting the value of an employee’s contributions, recognition reinforces a sense of purpose, belonging, and pride in one’s work. When employees feel seen and valued, they’re more connected to what they do—and more motivated to continue doing it well.

Center of Excellence research illuminates the true impact of recognition on motivation

Awardco’s Center of Excellence (COE) shared fresh research designed for one purpose: to help HR leaders make recognition programs that change how people show up at work.

The team surveyed 2,000 employees across 15 industries in the US and UK, then used statistical modeling to unpack what actually drives effort and which recognition levers move outcomes like engagement, intent to stay, and well-being.

Why the COE studied motivation instead of engagement

The researchers deliberately chose to anchor the study in motivation rather than engagement. The reasoning was practical: Engagement often means different things to different leaders. This makes it harder to get traction across an organization. 

Motivation within the workplace is more universally understood and easier to translate into action.

The 7 motivators that drive effort at work

When people make an effort, it’s rarely because of one factor. The study surfaced seven distinct motivators:

1. Material reward: Not just pay, this includes job security, status, and the ability to build a comfortable life
2. Expectations from colleagues: The pull of social pressure at work, including wanting to avoid criticism or earn respect
3. Expectations from personal life: Similar pressure, but from family, friends, and social circles outside work
4. Contribution: Wanting to help the team win and be part of a culture of hard work
5. Ideology: Mission and values alignment, plus a sense of learning and growth that moves someone forward
6. Achievement: The drive to hit goals, solve hard problems, and take pride in accomplishment
7. Enjoyment: Finding the work interesting, energizing, and absorbing
   

One standout finding: When the researchers attempted to treat money as a separate variable, it did not fit cleanly into the model. The key conclusion was that while pay is important, it alone does not explain effort.

From motivators to motivation profiles: a more usable model for leaders

Rather than assuming employees fall into one motivator category, the COE research shows that motivation tends to cluster into five common profiles. 

We encourage leaders to use these profiles as a roadmap for their recognition strategy: 

1. Actively demotivated: Little enjoyment, purpose, or connection to work
   

• What this looks like: Employees are doing the minimum, disengaging from meetings, or quietly withdrawing.
• What helps: Consistent, visible recognition for effort and progress (especially from leaders) can begin rebuilding connection and trust.

2. Disconnected: Some enjoyment or achievement, but low motivation overall 

• What this looks like: Employees complete tasks competently but feel detached from the broader mission.
• What helps: Recognition that links individual contributions to team or company outcomes helps create meaning beyond the task list.
  

3. Obligated: The largest group—effort driven mainly by expectations and external pressure rather than purpose or enjoyment

• What this looks like: Employees meet deadlines and targets but rely heavily on structure, reminders, or pressure to perform.
• What helps: Recognition that reinforces progress, learning, and autonomy can begin shifting motivation from external pressure to internal drive.

4. Bought in: Strong internal drivers like purpose, enjoyment, and contribution

• What this looks like: Employees take initiative, collaborate willingly, and care about outcomes beyond their role.
• What helps: Public recognition, peer appreciation, and opportunities to grow reinforce momentum and sustain engagement.
  

5. Firing on all cylinders: A mix of internal motivation and external rewards, where purpose, enjoyment, and material recognition reinforce each other

• What this looks like: Employees consistently perform at a high level and act as culture carriers.
• What helps: A balanced mix of visible recognition, meaningful rewards, and leadership acknowledgment keeps motivation strong and resilient.

This framework gives leaders more realistic goals. Not every employee will, or needs to, reach the top profile. Effective recognition programs focus on helping people move in healthier directions over time, rather than trying to force engagement through a single lever such as pay or perks.

Recognition is a driver, not a byproduct, of motivation

The research tested a key question: Do motivated people get recognized more, or does recognition drive more motivation?

Both relationships showed up, but the stronger effect ran in one direction: Recognition was the more powerful driver of the motivation profile.

This matters because it frames recognition as an intervention. It’s not a perk or a nice-to-have—it’s a reliable lever that can change what fuels effort.

Which types of recognition actually help shift profiles

The research also explored which recognition types showed up in different profiles, finding that:

• People in the actively demotivated group were still getting recognition, but mostly from their manager in private one-on-ones. This was not enough to spark stronger motivation.
• Movement toward buy-in was linked to recognition becoming more visible and more distributed, including meeting shout-outs and recognition from peers and senior leaders.
• The shift into firing on all cylinders was connected to a mix of recognition sources plus informal, day-to-day recognition through tools like Slack or Teams layered on top of other methods.

Multiple channels and multiple recognizers made recognition feel real, driving greater overall motivation.

The four recognition levers HR can intentionally design

The research called out four levers HR can actually design for:

1. How recognition shows up: One-on-ones, meeting shout-outs, email, platform posts, chat messages, and/or awards
2. Who gives it: Senior leaders, managers, and/or peers
3. Frequency: How often recognition happens and how consistently
4. Reward options: What employees receive when there is a reward component

What employees get most today

Over the prior three months, the most common recognition channels were private one-on-ones, meeting shout-outs, and manager emails.

What had the strongest impact on outcomes

A few findings stood out:

• Company awards were associated with the strongest lift in outcomes like engagement and intent to stay.
• Slack or Teams alone showed no measurable lift in sentiment outcomes, even though chat recognition helped when layered with other recognition types.
• Service anniversaries and birthdays were tied to meaningfully higher engagement. The gap was large enough to make these worth revisiting as a simple, scalable baseline.

Who recognition comes from changes what it influences

Recognition source mattered:

• Senior leader recognition carried the most weight, which is why leader buy-in is a program requirement, not a bonus.
• Manager recognition still mattered and needed to be consistent.
• Peer recognition did not move engagement or intent to stay as much, but it did improve well-being. For teams in demanding environments, that is a serious lever.

Frequency also had thresholds:

• Recognition from senior leaders needed to happen at least yearly.
• Manager recognition needed to happen at least quarterly, with more frequent recognition being better. Explore how managers can motivate employees.  

Rewards: What people want and what drives outcomes can differ

Employees overwhelmingly said they preferred gift cards. But gift cards showed a slight negative relationship with engagement in this dataset.

The rewards tied to stronger engagement were:

• Company-branded items
• Team activities or outings

The takeaway was not to avoid gift cards. It was to pair choice-based rewards with options that build identity and connection.

Practical takeaways from the COE research

If you want the shortest path to action from this session, it is this:

• Keep the program simple enough that employees and managers can remember how it works by standardizing on one or two primary recognition moments (such as meeting shout-outs or platform posts) and a clear, consistent reward structure that’s easy to explain and repeat.
• Design recognition to come from more than managers by enabling peer recognition and ensuring senior leaders regularly recognize contributions in visible, companywide settings.
• Treat chat recognition as a layer, not the whole strategy by using Slack or Teams for quick thank-yous while pairing it with more formal recognition like awards, emails, or leadership call-outs.
• Audit whether birthdays and service anniversaries are being consistently recognized by reviewing participation data and automating reminders or workflows so milestones are acknowledged regardless of team or manager.
• Balance reward choice with culture-building options by offering flexible rewards like gift cards alongside shared experiences, team activities, or company-branded items that reinforce belonging.
• Focus on incremental improvement rather than perfection by starting with small changes (such as increasing recognition frequency or expanding who can give recognition) and evolving the program over time.

For a deeper dive into the COE’s research, watch the full presentation recording here. You can also review a longer white paper with additional findings to dive deeper into this subject.

Meaningful recognition tips to drive workplace motivation

Successful recognition meets employees where they are—aligning with their needs, preferences, and expectations. For SMBs, where teams are smaller and leaders are closer to the day-to-day work, this personalization is often easier than you might think.

For example, if someone puts in a ton of extra work and expects monetary compensation, they’ll be disappointed by a team dinner. On the other hand, a gift card or cash bonus may feel unneeded if the employee was expecting a public shoutout for their work.

Here are ways to ensure your recognition hits the spot and impacts motivation every time.

1. Learn employee preferences

One of the greatest perks of working at a small or medium-sized business is that leaders often work closely with their teams. Use that proximity to your advantage. Simple conversations can uncover what kind of recognition resonates most.

Talk to employees to learn what kind of recognition they like. 

• Do they prefer public or private recognition? 
• Do they want money more than nonmonetary appreciation? 
• What type of recognition has felt most meaningful to them in the past?
• What’s one example of recognition that missed the mark?

Additionally, understand each employee’s professional goals so that you can recognize them when they make progress or learn new skills.

2. Include professional development as recognition

When employees are consistently providing great work, they should feel like they’re moving upward in their careers. Once again, learn about their career goals and recognize their efforts with new opportunities that align with those goals.

Maybe someone wants to travel to new locations for business, start managing a team, or go back to school.

When you tailor rewards and recognition to each person’s goals, their motivation will increase as they realize that their work is helping them make noticeable progress toward where they want to be.

3. Tie recognition into results and impact

Studies show that having a sense of purpose at work drives motivation, productivity, and engagement. A sense of purpose at work basically means experiencing fulfillment beyond a simple paycheck. Work is transformational, not simply transactional.

By tying frequent recognition to each employee’s specific achievements and helping them see how their work impacts business success, you can help build a feeling of purpose for everyone.

Here’s an example: Fred has put a lot of extra effort into building a new tool for your company app, and customers are loving the new feature. In recognizing Fred, make sure to share customer reviews or anecdotes to show him how much his work means to the company and its customers. Seeing the results will help Fred be motivated to put just as much effort into his next task.

4. Be genuine, timely, and specific

As general guidelines, recognition needs to follow these three principles:

• Genuine. Appreciation needs to feel real to be effective. Don’t settle for a cookie-cutter thank-you card or a careless compliment. Take the time to offer genuine recognition that speaks to the recipient’s preferences.
• Timely. Offer recognition within a few days of the behavior being recognized. If someone exceeded expectations for a project on Monday, don’t wait until next Wednesday to recognize them!
• Specific. In addition to tip #3, make sure recognitions are specific to the behavior and the results being recognized. A generalized “Great job” will feel much less special than a personalized message explaining why the recipient is appreciated.

5. Leverage recognition software

Knowing which recognition software on the market is right for your SMB requires thorough research and understanding. Fortunately, our team did the work for you. Compare Awardco with the top competitors on the market.

You’ll see why Awardco is the best choice. Fit for SMBs, it’s built to grow with your business and adapt to the ever-evolving needs of your departments and teams. By leveraging recognition software, admins can save time, resources, and money by streamlining their efforts via automation. 

Take small business CloudFit Software, for example. By using Awardco technology, the CloudFit team saved up to 8 hours each week on admin time and tracked a 90% engagement rate (key factor in motivation) on the recognition platform.  

For further exploration, we encourage you to dive into our guide on tried-and-true employee motivation strategies, ideas, and gifts.

Increase motivation with impactful employee recognition

The reasons for employee recognition are hopefully clear—when done right, employees respond with greater motivation, engagement, and productivity because they know they’re cared about and their efforts are appreciated.

See how modern recognition strategies can boost motivation by scheduling a demo with Awardco today.