Employee of the Month Program: An Honest Guide
How to run an employee of the month program, what the research says about whether it works, fair criteria, small-team math, and better alternatives.
Employee of the Month Program
What the research actually says about whether it works, and how to run one that does not backfire on a small team
Almost every guide to this topic tells you how to run the program and skips whether you should. That is a strange omission, because the peer-reviewed research on the classic single-winner monthly format is genuinely unflattering, and the arithmetic on a small team is worse than most owners realize.
So this guide covers both. What the evidence says, why the standard format struggles below about twenty people, and then, if you still want one, how to design it so it does not do more harm than good. Recognition works. There is strong evidence for that. The specific mechanic of crowning one winner per month while everyone else loses is the weakest available way to deliver it.
Written for a founder or owner running this without an HR department, at a company where you know everyone by name and a badly handled award will be noticed by all of them. I build FirstHR for exactly that size.
What Is an Employee of the Month Program?
An employee of the month program is a recognition scheme in which one employee is publicly singled out each month for outstanding contribution, usually against employer-set criteria and often with a small reward attached.
The last sentence matters more than it looks. A program is not a strategy, and running one does not mean your people feel recognized. The wider subject, of which this is one narrow tactic, is covered in the employee recognition guide.
Does It Actually Work?
This is the question every other guide skips, and the honest answer requires separating two things that get conflated: recognition in general, and this specific format.
Recognition in general has strong evidence behind it. Per Gallup research conducted with Workhuman, which tracked nearly 3,500 employees from 2022 to 2024, well-recognized employees were 45 percent less likely to have turned over after two years. The same research found that more than half of US employees either receive no recognition at all or receive recognition that satisfies none of the quality criteria, which is a substantial and cheap opportunity.
The single-winner monthly format specifically has evidence against it. Johnson and Dickinson, publishing in the Journal of Organizational Behavior Management in 2010, ran two controlled experiments in which participants competed as members of a fabricated team for a weekly incentive, with the second experiment adding a $50 bonus for the winner. Participants were always placed between second and fifth to assess the effect of being an unrewarded runner-up. Their conclusion: results suggest that employee-of-the-month programs do not sustain improved performance and may even have detrimental effects.
Worth stating the limits of that study honestly: it was an experimental data-entry task rather than a field study of real workplaces, and one paper does not settle a question. But it is independent peer-reviewed research pointing in a direction most vendor content does not acknowledge exists, and the mechanism it identifies is intuitive enough to take seriously.
The Small Team Problem
The structural issue with a monthly single-winner award gets worse, not better, as the team gets smaller, which is the opposite of what most people assume.
Two things follow from that table. First, on a six-person team the program produces five losers every month, and those five all know each other and sat in the same room when the winner was announced. At three hundred people the same award is a pleasant abstraction; at six it is a monthly public ranking of a small group of colleagues.
Second, on a small team you will eventually run out of genuine winners. Twelve months, twelve people, and by month seven you are choosing someone because they have not had a turn. Everyone notices. The award becomes a rotation, and a rotation communicates that recognition here is an administrative schedule rather than a response to anything you did.
When It Does Work
The format is not universally bad. It works better under specific conditions, and it is worth checking whether yours match.
The honest summary: if you have thirty people doing comparable work in a high-turnover environment, the classic format is defensible. If you have twelve people doing different jobs, it is the wrong instrument and something else will serve you better.
Choosing Fair Criteria
If you are running one, criteria are what separate a program that builds trust from one that erodes it. They should be specific, observable, and published before the first award.
The two rows marked avoid deserve explanation. Attendance-based criteria systematically disadvantage employees with caregiving responsibilities, disabilities, or protected medical leave, which is both unfair and a potential discrimination exposure. Longest hours rewards presence over contribution, and the person who finished the same work in less time is penalized for being better at it.
The test for any criterion: could an employee read it and know what they would need to do differently? If not, it is a sentiment rather than a criterion, and a program built on sentiments is one where people conclude the decision was made on other grounds. Where this fits with your other written rules is covered in the company policy guide.
Avoiding Favoritism
Favoritism does not have to be real to damage a program. If it looks like favoritism, it functions like favoritism, and at a small company perception forms fast.
The fourth check is the one people miss. Visible roles generate stories and invisible roles do not, and this has nothing to do with contribution. Sales closes a deal in front of everyone; the person who prevented a problem from happening produced no event at all. Any program relying on noticing will systematically favor the first kind of work unless you deliberately correct for it.
Tracking winners over time is the cheapest safeguard available. A spreadsheet with names and dates takes seconds to maintain and immediately reveals whether the program is recognizing contribution or recognizing proximity to the person deciding.
How to Start the Program
If you have read the caveats and still want one, here is how to set it up so it survives contact with a real team.
Reward Ideas by Budget
Grouped by what they cost, because at a small business that is the binding constraint. The no-cost options are not consolation prizes; some of them work better than the paid ones.
The pattern in what people actually value: time and autonomy beat objects, and specificity beats generosity. A twenty-dollar gift card to a place they mentioned liking lands better than a fifty-dollar generic one, because the first shows you were paying attention and the second shows you had a budget line. More options for rewarding people without spending much are in the non-monetary incentives guide.
One administrative note that catches small employers: cash and gift cards given to employees are generally taxable wages rather than tax-free gifts, and belong in payroll with withholding applied. The bonus guide covers the mechanics.
Formats That Work Better
Five alternatives that keep what is good about the idea while removing the structural problem. All five work at any team size, and most cost less than the original.
The last one deserves emphasis because it is both the cheapest and the best supported. Recognition works best when it is frequent, specific, and close to the event. A monthly award is by definition infrequent and, for most recipients, delayed by weeks from whatever it is recognizing. A channel where anyone can thank anyone in the moment delivers more recognition to more people at essentially zero cost, and it does not require anyone to lose.
None of this means you cannot have a formal award. It means the formal award should sit on top of continuous recognition rather than substituting for it. Where this fits into ongoing feedback generally is in the employee feedback guide and the one-to-one meetings guide.
Common Mistakes
| Mistake | Why it happens | What to do instead |
|---|---|---|
| Unpublished criteria | It feels easier to keep the decision flexible | Publish three to five specific criteria before the first award; flexibility reads as arbitrariness |
| Manager decides alone | It is the fastest route and nobody objects at first | Peer nomination with at least two decision-makers, so the outcome is not one person's opinion |
| Rotating through the team | Monthly cadence forces a winner even when nobody stood out | Move to quarterly, or allow a month with no award rather than manufacturing one |
| Rewarding visibility | Customer-facing work generates stories and back-office work does not | Deliberately look for contributions that produced no event, and ask peers who helped them |
| A generic reward | A plaque is easy and requires no thought | Ask what people want; time off and specific personal gestures outperform objects consistently |
| Never reviewing it | The program becomes furniture and nobody wants to be the one to question it | Set a review date at launch and honestly assess whether it is doing what you wanted |
The third row is the most common failure and the most damaging, because a rotation is worse than nothing: it teaches people that recognition here is unrelated to what they do. If you cannot identify a genuine winner in a given month, skipping that month is a better signal than inventing one.
Quick Self-Check
Six questions before you launch or continue.
None of this requires an HR department or a recognition platform. It requires published criteria, more than one decider, and honesty about whether the format fits the team you actually have. The broader picture of keeping people engaged is in the employee engagement guide, and what it costs when they leave in the cost of turnover guide.
Frequently Asked Questions
What is an employee of the month program?
An employee of the month program is a recognition scheme in which one employee is publicly singled out each month for outstanding contribution, usually based on criteria set by the employer and often accompanied by a small reward. The format dates to mid-twentieth-century American workplaces and remains widely used, particularly in retail, hospitality, and service businesses. It is one specific tactic within the broader category of employee recognition rather than a recognition strategy in itself.
Do employee of the month programs actually work?
The peer-reviewed evidence is not encouraging for the classic format. Johnson and Dickinson, publishing in the Journal of Organizational Behavior Management in 2010, ran two controlled experiments in which participants competed for a weekly award, with the second adding a $50 bonus. Their conclusion was that such programs do not sustain improved performance and may even have detrimental effects. Recognition in general is strongly supported by evidence; the single-winner monthly competition specifically is not.
Is employee of the month a good idea for a small business?
It depends on how you design it, and the standard format is a poor fit below about twenty people. The arithmetic is the problem: on a six-person team, a monthly single-winner award means five people lose every month and an average employee wins twice a year at best. That structure turns recognition into a ranking exercise among people who all know each other well. Multiple simultaneous awards, peer nomination, or a quarterly cadence work far better at small scale.
What are good criteria for employee of the month?
Criteria should be specific, observable, and published before the first award. Strong ones include quality of work measured against a written standard, reliability in meeting commitments, helping colleagues with a specific named instance, initiative in solving problems unasked, and demonstrable customer impact. Avoid attendance-based criteria, which disadvantage caregivers and employees on protected leave, and avoid rewarding longest hours, which measures presence rather than contribution and encourages burnout.
How do you choose employee of the month fairly?
Publish the criteria in advance, use peer nominations that require a specific example rather than a general endorsement, involve more than one decision-maker, and track who has won over time. If the same two people keep winning, the program is measuring visibility rather than contribution. Watch particularly for bias toward customer-facing roles, which naturally generate stories, over back-office work that is equally valuable but less visible.
What should the employee of the month reward be?
Something the recipient actually wants, which is usually not a certificate. At no cost, a specific public thank-you naming what was done, first pick of schedule, or the chance to choose a team activity. Under fifty dollars, a gift card somewhere they actually go or a charity donation in their name. Above that, an extra paid day off is consistently the most requested. Note that cash and gift cards are generally taxable wages and should go through payroll.
How often should you give employee of the month?
Monthly is the default and is often too frequent for a small business, because it forces you to find a winner whether or not anyone genuinely stood out. When that happens the award becomes a rotation, everyone notices, and it stops meaning anything. Quarterly gives you enough distance to have real substance behind each award. Separately, continuous small recognition delivered close to the event has better evidence behind it than any scheduled award.
What are the alternatives to employee of the month?
Several formats keep the benefits while removing the zero-sum structure. Run multiple simultaneous awards for different kinds of contribution rather than one overall winner. Use peer-to-peer recognition where anyone can recognize anyone at any time. Recognize the specific act rather than crowning a best employee, which avoids implying everyone else is worse. Or run a continuous recognition channel with no ceremony, which is the lowest-cost option and has the strongest evidence behind it.
Does employee recognition reduce turnover?
The evidence for recognition generally is strong. Gallup and Workhuman tracked 3,447 employees from 2022 to 2024 and found that employees who received high-quality recognition were 45 percent less likely to have left their job two years later. The same research found that more than half of US employees either receive no recognition at all or receive recognition that meets none of the quality criteria, which suggests the opportunity is less about running a program and more about doing it well.
How do you end an employee of the month program?
Say plainly that you are changing it and why, then replace it rather than simply stopping. Quietly discontinuing a program signals that recognition was never a priority, whereas announcing that you are moving to a format where more people can be recognized reads as an upgrade. Frame it in terms of what the new approach does better, name the date the change takes effect, and make sure the replacement is running before the old one ends.