The art of celebrating team milestones has evolved into a crucial leadership skill. A recent study by Nectar, an employee recognition software company, found that nearly 84% of employees say that recognition affects their motivation to succeed at work, and nearly eight in 10 people admit that they’d be more productive if they were recognized more frequently.

The benefits of a high-recognition culture extend beyond mere statistics. Teams that feel valued and acknowledged tend to exhibit higher levels of innovation and ownership — attributes that are indispensable for a startup’s agility and adaptability.

For new ventures, the first few years are a time of intense growth and inevitable challenges. It’s during this formative phase that the seeds of company culture take root. Establishing a tradition of recognition early on can have a profound effect on shaping the team’s dynamics. Startups like Slack and Airbnb have integrated milestone celebrations into their operational rhythms, acknowledging sales and funding successes as well as product launches, positive customer feedback and team members’ personal growth achievements.

Related: The Importance of Recognizing Your Employees

Acknowledgement needs to be genuine

Celebrating milestones is not just about recognizing the past or present; it’s about inspiring for the future. It serves as a motivational carrot, guiding the team through the next series of goals and challenges. By publicly celebrating milestones, startups also craft their narrative in the broader industry context, signaling success to potential investors, partners and future employees.

However, the approach to recognition must be genuine and aligned with the startup’s values. Hollow gestures or a one-size-fits-all approach can backfire, leading to cynicism and a disengaged workforce. Tailoring recognition programs to fit the unique culture and individual achievements of team members ensures that the act of recognition is both meaningful and reinforces the desired company culture.

As such, the entrepreneurial journey demands more than just financial savvy and strategic planning; it requires a keen understanding of human motivation and team dynamics. Recognizing milestones is a way for leaders to show that they value their team’s contributions, creating a sense of belonging and shared purpose that can propel a startup toward sustainable growth and innovation.

Recognition fuels motivation and engagement

Without a doubt, recognition serves as a critical motivator that enhances employee engagement and drives performance. For entrepreneurs and startup leaders who’d like to improve their recognition capabilities, here are a few considerations:

1. Set clear milestones

The act of setting clear milestones is rooted in the principle of Management by Objectives (MBO), a widely endorsed management philosophy proposed by Peter Drucker. MBO emphasizes the importance of aligning individual objectives with the overall strategic goals of the organization, thereby ensuring that every team member is working toward a common endpoint. By setting clear and achievable targets, startups create a focused and energized workforce.

Setting milestones goes beyond just establishing objectives, however. It’s about creating a narrative for the startup’s journey. This narrative helps team members visualize their path to success and understand how their contributions move the company forward. Milestones act as chapters in the startup’s story, each with its own set of goals, challenges and opportunities for growth.

Incorporating behavioral insights into milestone setting can also enhance effectiveness. According to the Goal Setting Theory by Locke and Latham, high performance is linked to specific and challenging goals. Startups that effectively communicate these targets create an environment of high achievement. For example, Twitter, during its early growth phase, made use of specific user growth targets as milestones, which were instrumental in driving the company’s product development and marketing strategies.

Related: 5 Goal-Setting Guidelines That Drive Success

2. Celebrate achievements publicly

Public recognition leverages the innate human need for social status and belonging, tapping into intrinsic motivation that can elevate performance and foster a strong workplace culture. When a startup takes the time to spotlight its team’s successes, it sends a message that each member’s work is valued and impactful. This is particularly powerful in smaller organizations, where individual contributions can have a substantial effect on the company’s trajectory.

Celebrating achievements in a public forum, such as through social media or industry events, extends the reach of this recognition. It transforms internal milestones into opportunities for branding and networking, positioning the company as a thriving and supportive environment. This external recognition can be pivotal for startups looking to attract top talent and can often lead to increased interest from potential investors who are keen to back a winning team.

Additionally, public recognition provides an authentic narrative for the company’s progress and work culture. In the digital age, where employer review sites like Glassdoor and social media channels can heavily influence a company’s reputation, authentic stories of achievement and recognition are valuable for the employer brand. When done right, these stories can resonate with the values and aspirations of prospective employees and customers.

3. Incorporate meaningful rewards

By rewarding employees after the completion of a milestone, you encourage the repetition of the behavior that led to the success. This strategy is aligned with the law of effect, a theory developed by Edward Thorndike, which states that behaviors followed by pleasant outcomes are likely to be repeated.

The keyword here is “meaningful.” For rewards to have the desired effect, they must resonate with the recipients on a personal level. This requires a nuanced understanding of the team’s values and preferences. A reward that feels generic or disconnected from the effort expended can fall flat or even have a demotivating effect. For example, a trophy store might be able to create a special award that’s a source of pride for one employee, while another might find an extra day off or educational opportunities more rewarding.

Adobe’s Kickbox program is an excellent example of an employee recognition initiative that empowers employees to innovate and pursue their ideas. It does this by providing a physical “Kickbox” that contains everything an employee might need to brainstorm, develop and test a new concept, including a guide with six distinct levels designed to steer the ideation process from inception to pitch. The most notable inclusion in the box is a $1,000 prepaid credit card which employees can spend with no strings attached, enabling them to prototype or test their ideas without having to justify the expense or navigate through layers of bureaucracy.

Related: Do Your Employees Feel Recognized? 10 Powerful Ways to Set Up Employee Recognition Programs

4. Foster a culture of appreciation

When appreciation is woven into the very fabric of company culture, it can transform the workplace into a hub of positivity and productivity. In September 2023, Workhuman and Gallup released a report that found that “employees who strongly agree that recognition is an important part of their organization’s culture are 3.7 times as likely to be engaged, 3.8 times as likely to feel connected to their culture, and half as likely to experience burnout than those who do not.”

A culture of appreciation is particularly important in startups, where the pace is fast and the workload can be intense. In such settings, small gestures of acknowledgment can go a long way in making team members feel seen and valued for their contributions. For example, a platform that allows peers to give micro-bonuses to each other for day-to-day accomplishments can establish a sense of appreciation that comes directly from colleagues, not just from top-down leadership.

Remember, a culture of appreciation must be inclusive and diverse in its recognition practices. It should acknowledge the different roles, efforts and accomplishments across the company, ensuring that no contribution goes unnoticed. This includes recognizing the efforts of support staff, interns or remote workers who contribute just as significantly to the company’s success.