n tough economic times, with layoffs, reduced hours and scaled-back perks, employees are often asked to do more with less. When a lack of recognition and incentives is added to this situation, production and employee engagement suffer.

But it doesn't have to be that way. Building a culture of recognition through incentives can reverse a downward spiral. Business Futurists Roger Herman and Joyce Gioia report that statistics show companies that recognize their people outperform companies that don't by 30 percent to 40 percent. In addition to driving business results, recognition and incentives change employee culture—encouraging loyalty, engagement and enthusiasm for the job.

A culture of recognition exists in organizations that catch people doing the right things right. In these organizations:

• Recognition is a corporate value, operating at every level.
• Recognition is a form of feedback, especially valued by Gen X and Y employees*.
• Recognition happens informally and formally. Improvement is rewarded, not just top performers.
• Reward programs are customized. Employees choose rewards meaningful to them—another hot button with Gen X and Yers*.
• Best practices—behaviors and activities that get results—are identified, cloned and rewarded.

*The influx of Gen X and Yers into the workforce has increased the importance of a culture of recognition. These generations were raised on feedback, recognition and reward. They thrive in a supportive environment that values their unique contributions and rewards them, not just as a collective group, but in personal, individual ways as well.