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3 Ways Peer-to-Peer Recognition Improves Your Bottom Line

Written by
George Dickson
George Dickson

Can you prove the ROI of a peer-to-peer recognition program?

Employee recognition is a crucial element of any great company culture, and the peer-to-peer model is an incredibly efficient and effective way to implement it. But implementing and maintaining a quality program does require an investment of time and resources. 

Luckily, it's easy to see the massive returns an investment in peer recognition provides if you know where to look. Let's take a quick dive into three of the most important ways peer-to-peer recognition can positively impact an organization's bottom line.


Peer-to-Peer Recognition: Improving Your Bottom Line

1. Improved employee engagement

Employee engagement is one of the greatest challenges—and greatest opportunities—in modern business. Employees are generally funneled into three categories in terms of their engagement:

  • Engaged: Engaged employees have a positive emotional investment in the work they do and the organization they work for. They're working with a strong purpose and are focused on moving their team and the organization forward. Highly engaged employees nearly always excel and perform far beyond industry benchmarks. With a solid foundation and a team of engaged employees, there's nothing you can't accomplish.

  • Not engaged: Employees who are not engaged are 'checked-out,' and simply 'going through the motions.' Although they're not actively working against the organization, they're not pulling for it either.

  • Actively disengaged: Actively disengaged employees are not just checked out, they're acting out and expressing their disappointment, or even their contempt for your organization. Actively disengaged employees aren't just pulling against the momentum of your organization, they're often turning others around them and damaging company culture.

Perhaps one of the most surprising statistics about engagement is the proportion of 'not engaged' and 'actively disengaged' employees that exist in the average organization. According to research published by Gallup, only 36% of US employees are considered "engaged." 

Why is that such a problem?

There's a massive cost associated with disengaged employees. In the United States alone, the cost of poor engagement is estimated to be as much as $550 billion in lost productivity.

In an article for Glassdoor, Alyssa Retallick explores these costs, plus the additional cost to a company's culture and its brand.

Peer-to-peer recognition helps improve engagement by providing employees with the ability to celebrate, recognize, and often reward the contributions their colleagues make.

While facilitating this volume of recognition across your entire organization would be a monumental challenge, if not impossible, with a simple top-down approach peer recognition makes it easy. 

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2. Improved employee retention

Employee retention is right up there with engagement in terms of how much it impacts your organization's bottom line. If you're curious to see (or share) the cost in numerical terms, check out our Cost of Employee Turnover Calculator.

Losing a good employee is unfortunate and expensive, but it's often preventable.

The cost of losing a good employee isn't usually considered in its entirety. There are the obvious costs of lost productivity during that employee's absence, and the costs of recruitment, but those costs are really just the tip of the iceberg. 

A large number of less visible, but equally dramatic costs are associated with losing a top-performing employee:

Increased workload

When a good employee leaves, the rest of their team is often faced with an increased workload. Even if that increase is temporary, it's going to impact their output, their stress levels, and their bandwidth for taking on new tasks.

Training costs

Paperwork, equipment, and administrative overhead are only a small part of what it costs to train a new employee. Mentoring a new colleague through their first few weeks (or months) is a valuable work for a member of your organization to do, but it comes at a cost of even further-reduced bandwidth and output.

Ramping-up period

Most employees don't "ramp up," or jump right into their job and start producing at the level of their predecessor, immediately, especially if their predecessors were top performers. It can take months, or even years, for new employees to reach the output level of former top performers.

So how do you improve retention

In many cases, leaders look to salary—however, salary is fungible. In other words, your salary dollars are worth exactly the same amount as your competitors' salary dollars. If you're competing for talent retention on salary alone, companies with more money to throw around will beat you every time. When that happens, you'll need to be ready to pay both the visible and hidden costs of attrition.

Company culture, on the other hand, is the opposite of fungible. If your organization's culture is unique and positive, you have something that no other company can offer. According to a 2021 survey, 77% of workers polled told researchers they would look seriously at a company's culture before trying to get a job there. 

Recognition is the foundation of an extraordinary organizational culture.

Employees need to know the work they do is important, meaningful, and moving their team forward. Peer recognition provides an opportunity to see that—both at a granular, personal level, and at an organizational level.

Visible peer recognition also provides prime examples of exceptional performance for new employees to emulate.


3. Improved recruitment

Culture isn't just a tool for retaining good employees—it's equally important as a recruiting tool. In her article for Undercover Recruiter, OnDeck's SVP of People Operations Lorna Hagen writes:

A company’s culture is always in the background, either motivating or frustrating employees. Saying you have a great culture and having one might be two different things. And, in the context of recruiting, you can’t hide a bad culture for long. Eventually, people find out.

Having the ability to both attract and retain the industry's best performers and brightest new stars is a crucial element of improving your company's bottom line.

So is your company culture an asset or a liability? 

If your culture is an asset, the best parts of it can be strengthened by peer recognition. Peer recognition is a natural way to improve cultural alignment, with each contribution and corresponding piece of recognition exemplifying your organizational values.

If your culture is actively losing candidates and long-standing employees, facilitating a recognition-rich environment can help turn that trend around.

The takeaway

These are just a few ways that peer recognition can make a positive impact on your company's bottom line.

You can increase that impact further with some of the tips we shared in our eBook, Getting the Most from Peer Recognition!

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Originally published on February 17, 2016 → Last updated March 11, 2022

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George Dickson

George is dedicated to strengthening organizational cultures with thoughtful leadership and frequent recognition. George formerly managed content and community at Bonusly.


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