Two-thirds of employees don’t believe their senior leadership supports recognition programs.
Considering you’re reading this article, you may be one of those employees. 😏
Even worse, 83% of employees think their organization’s culture doesn’t support recognition. (If you need a refresher on the benefits of recognition, check out our Guide to Modern Employee Recognition.) By not implementing recognition programs, companies miss out on opportunities for stronger teams, less turnover, increased employee engagement, and enhanced productivity.
While members of your leadership team no doubt understand that recognition is important in an abstract sense, their priorities are operational and financial. They're focused primarily on the bottom line, sometimes to the detriment of indirect influences on the bottom line.
Manage the top line, which is your strategy, your people, and your products, and the bottom line will follow.
Fortunately, there’s plenty of research on the quantitative value of recognition. In order to get buy-in for employee engagement initiatives like recognition programs, your C-suite has to understand its impact on revenue and costs.
As a recognition champion, this is where you come in. 💪
Building a case for recognition
First, consider how recognition ties into your company’s desired business outcomes. What problems would an employee recognition program solve? How does solving those problems help your company meet its business objectives? An effective employee recognition program generates employee engagement and can solve problems like high turnover, siloed teams, low morale, and performance plateaus. Let’s dive in.
If your primary concern is...
Employee turnover is a huge concern for many employees. Why are your employees leaving?! How do you get them to stay?
Here’s a stat you’ll want in your arsenal: Companies with recognition-rich cultures have 31% less voluntary turnover than companies who don’t. To get even more granular, employees who don’t feel recognized are twice as likely to quit within a year.
Turnover costs a lot more than losing one worker’s productivity. Depending on your industry, the resources it takes to replace that employee can cost anywhere from 16% to 213% of an employees’ annual salary. Think about it: this can include an increased unemployment tax rate, writing and posting a job description, interviewing candidates, paying referral bonuses, even increasing the workload of existing employees while a position is open, and training new hires. That’s not even including the hidden costs like a negative impact on morale when a team loses a colleague.
Want a hard number to present? Check out our Cost of Turnover Calculator.
Increasing employee engagement
If you’re overwhelmed by a horde of disengaged employees, recognition can be a tool to snap them out of it. A team with low morale risks decreased productivity due to more frequent absenteeism, disorganized workspaces, team conflicts, and insubordination.
Recognition is so closely tied to employee engagement that when recognition increases, employee engagement follows suit. Engaged employees are committed and enthusiastic about their work and, in turn, are more productive and work hard to achieve the company’s goals.
Enriching your company culture
Every company has a culture, whether intentionally developed or not. It’s typically based on a company’s core values and can explain to employees what they should do, believe, or be to enjoy the success of the company and their own roles.
Recognition and rewards programs are a unique opportunity to visibly and frequently promote your company’s values and drive home how employees are helping the company achieve its objectives.
With Bonusly, for example, you can add your core values as default hashtags for employees to use when recognizing another teammate. Seeing a constant stream of those hashtags and tangible examples of how employees are embodying your company’s core values can make a big impact to your company’s day-to-day.
Frequently asked questions
In this section, you’ll find some of the most common questions that senior leadership will have regarding employee recognition. We’re old pros at answering these queries, so here’s the hard data and key insights you need to know:
Q: “Do employees really want praise rather than money?”
This isn't specific to millennials, either. The more employees are recognized, the more satisfied they are with their jobs—even the difference between weekly and daily recognition increases the number of satisfied employees from 85% to 94%.
A 2016 survey of over 1,000 employees showed that 30% would rather be recognized in a company-wide email from an executive than receive a monetary reward of $500. In fact, within that 30%, over three quarters would only choose the monetary reward over public recognition if it was $2,000 or greater. The best things in life are (mostly) free. 🤷
Of course, quality plays a big part in whether recognition is effective. Empty praise and meaningless trinkets can do more damage than nothing at all. Modern recognition programs often empower employees to choose a gift that is meaningful to them personally, leaving the power of appreciation to come from thoughtful words emphasizing the intrinsic value of their performance.
Values-based recognition programs are also more effective. Beyond acknowledging how employees exemplify corporate values and signaling to others how that looks, rewards like days off and donations reinforce Employee Value Propositions (EVP) that include work-life balance, community, and social responsibility.
Q: “Does it make a difference to the bottom line?”
For skeptical executives, return on investment must be proven for immediate and long-term benefit to the organization. We’ve split this section up into three sections, revenue, costs, and investment, to best address each concern.
Willis Towers Watson reported that recognizing performance increases engagement by almost 60%. Likewise, Bersin by Deloitte found employee engagement, productivity, and performance are 14% higher in workplaces with recognition programs. And organizations at the 99th percentile of employee engagement have four times the success rate as those at the first.
Recognition satisfies the human needs of approval, esteem, and affiliation, which triggers the norm of reciprocity to give back to supportive employers. When employees perceive their organization values their contributions, they are less stressed, return to work sooner after injury, and improve their performance. For instance, traffic patrol officers make more DUI arrests and steel company staff make more creative suggestions for improving operations when perceived organizational support is high.
A 2017 study of nine organizations confirmed that increased recognition leads employees to predict desired outcomes and therefore invest more into in-role and extra-role work behaviors:
- Conscientiousness in performing job tasks
- Amelioration efforts to improve job tasks
- Collaboration to maximize group efficiency
- Personal initiative to improve group efficiency
- Involvement at the organizational level
Only three in ten employees feel they’ve received recognition in the past seven days. Raising that to six in ten could reduce absenteeism by 27%, reduce shrinkage by 10%, and raise quality by 24%.
Furthermore, employees who don’t feel recognized are twice as likely to quit within a year. A whopping 29% of departing employees specifically cite recognition as a key reason they quit. Turnover costs add up quickly: lost knowledge, lower productivity, overworked remaining staff, recruitment and training.
It bears repeating: turnover can cost you twice the salary of each employee who leaves. 😱
HR usually administers recognition programs, while the budget can be department-specific, centralized, or both. Most organizations (42% of those surveyed by WorldatWork in 2015) budget 0.3% or less of payroll toward recognition. Bersin by Deloitte reported spending was closer to 1% in 2012.
While there are more intensive options, these programs don’t have to be cumbersome. By making a positive upfront investment in employees, you can reassert your values and priorities.
Q: “Don’t we already recognize employees?”
Your organization, like 89% of North American organizations, may already have a recognition program. However, 42% of employees even know about their employer’s recognition program and additionally, only 24% of employees are satisfied with management’s recognition of job performance.
That’s a lot to make up for.
This may have something to do with the fact that years of service remains the most common recognition program, which alone is unlikely to impact employee engagement or retention. If these programs don’t improve business performance, it can lead to doubt in the value of all recognition.
In TINYpulse’s analysis of surveys from 1,000 organizations across the world, they found just 26% of employees felt strongly valued at work. Since infrequent and untimely recognition were the main obstacles, they recommend peer recognition for job satisfaction and above-and-beyond performance.
Other unintentional barriers include: unclear criteria; limited capabilities to distribute rewards fairly; and, time-consuming forms and approvals process. Senior leaders assume employees are recognized more than annually, but 70% of employees report recognition once a year or not at all.
It is not enough to implement any recognition program—programs should also align with the values and needs of the organization. By reallocating money you're already spending on turnover and ineffective recognition programs, you can build a budget for effective recognition.
Need a cheat sheet? Here are some key facts to take to your next C-suite meeting to really drive home that your company needs a recognition program:
- 76% of employees are unsatisfied with recognition of job performance
- Employees who don’t feel recognized are twice as likely to quit within a year
- 82% of employees think it's better to give someone praise than a gift
- Recognition increases employee engagement between 14% and 60%
- Employees who feel valued are more present, productive, and innovative
- Administration and costs are not as cumbersome as you may think
Check out "Getting the buy-in you need to launch an effective employee recognition program", a webinar we recorded with HR.com, to hear real-world insights from industry veteran Carol Fraser SHRM-SCP, CCP, and Raphael Crawford-Marks and Emily Ciavolino from Bonusly.
Good luck! You’ll be building a recognition program in no time. If you're looking for more ways to successfully build recognition-rich organizational culture, check out our recognition guide:
Did these tips help? What’s your biggest obstacle to implementing a recognition program? Or, if you’re a recognition veteran, what are your recommendations for getting buy-in for a recognition program?