Dive Brief:
- Employee recognition — the act of publicly acknowledging employees for who they are and what they do — is critical to the experience and performance of both employees and their leaders, a recent Gallup study found.
- Training managers to provide recognition and taking other steps to establish a companywide culture that embraces the approach could save a 10,000-employee company up to $16.1 million in turnover costs annually.
- Despite research supporting the link between recognition and improved business outcomes, 81% of leaders say recognition is not a major strategic priority for their organization.
Dive Insight:
Recognition in the workplace can positively impact employee productivity and retention as well as brand-building and can even reduce turnover costs. However, many organizations are not fully investing in this — or budgeting for it, Gallup said.
The global analytics and advice firm partnered with Workhuman, a cloud-based employee management platform, to study employees across the United States, the U.K. and Ireland to determine what recognition means to them and the impact it has on their attitude towards work.
The findings revealed that not investing enough time, money and resources in recognition can be just as problematic as underfunding it. Almost half of senior leaders studied reported that they were unaware of what percent of their payroll budget is allocated to recognition, while more than 1 in 10 were unaware if their organization had any budget for recognition at all.
When organizations implement recognition practices in the workplace, employees are more committed, more engaged and connected to their workplace culture, have stronger working relationships and feel a sense of belonging at their organization, the study found. Additionally, employees who are emotionally fulfilled through appreciation and acknowledgement are more likely to stay with their organization, reducing turnover costs.
“I will say that when I feel less appreciated or less recognized, that’s when the job searches start,” said one employee involved in the study.
Employees who have good recognition experiences are three times more likely to strongly agree they feel a sense of loyalty to their organization. If organizations are able to foster a more positive working environment, they can realize better overall business performance through savings in turnover costs and the acquisition of new customers.
The study breaks down the reduction of turnover costs per recognition in two ways, firstly with recognition being critical for engagement and secondly with recognition having unique protective effects beyond engagement that provide additional savings. When employees feel appreciated by their organization, they are more likely to become brand ambassadors and advocate for products, services and their workplace. This in turn adds more value to the organization by attracting customers and potential future employees.
Between more employees quitting their jobs as part of The Great Resignation and remote work becoming more prevalent, C-suite executives should consider implementing recognition programs.
Employees are not the only ones who can benefit from recognition in the workplace — the study cited that the existence of recognition programs, or lack thereof, impacts how they lead and the guidance they provide.
