Companies are always looking for ways to improve their business growth, overall productivity, and bottom-line results. They apply strategies to attract and retain high-performers and lead highly engaged and productive teams to achieve success.
Employee recognition remains an important business strategy that every company needs to consider, and I'll tell you why. According to Gallup's research, lack of recognition is a significant reason why employees leave their jobs, and "the more talented the employee is, the faster they leave." This implies that companies that do not recognize their employees will most likely suffer high turnover costs—ranging from 5.8 percent up to 213 percent of an employee's salary, depending on the job and employee skills.
Besides the direct replacement costs, other associated costs include lost productivity and time, temporary coverage, and new employee training.
Think about what those costs would look like if more than one employee left the company! Do you now understand why HR and business leaders need to pay more attention to employee recognition?
For part two, we have compiled a list of key employee recognition stats that every HR leader should know. You will find the information helpful as you make the business case for your company's employee recognition programs.
Source: Everyday Health
The workplace can cause significant stress for many workers. Among millennials and Gen Zers, the chronically work-stressed rises to 44 percent. Excessive stress can, in turn, lead to burnout, which costs the global economy approximately £255 billion. Knowing these facts, companies can improve employees' mental health and well-being by creating a recognition culture.
Note that one of Gallup's Q12 employee recognition survey questions asks if the respondent has received praise in the last seven days. According to best practices, employee recognition should be frequent and given on time. If you lead a 10-person team, this statistic shows that at least two employees have received recognition for doing good work in the last seven days.
The danger of not recognizing your employees, according to Gallup, is that "employees who do not feel adequately recognized are twice as likely to say they'll quit in the next year." Therefore, it is crucial to regularly recognize your employees and peers for their meaningful contributions to the workplace.
Employee recognition can play a significant role in creating a positive employer brand for companies. During recruitment, it is common to find candidates assessing an employer's brand before deciding to move forward with the hiring process. Often, exceptional candidates choose to work for a company based on other factors beyond compensation—they evaluate its values, mission, and other cultural elements.
When a company creates a positive culture for existing employees, one where they are recognized for their contributions, employees will help publicize their company as a great place to work. Since people are four times more likely to buy [your brand] when referred by friends, such a positive reputation can make it easier to attract top-tier candidates to your company. As a result, companies will be saving time and cost in their recruitment efforts.
In their 2018 global report, Randstad presented important insights from a survey of over 175,000 respondents in 30 countries. According to this report, one of the factors driving employees away from companies is the lack of recognition and rewards. Clearly, employee recognition is a retention strategy, and employees who feel valued will remain at their jobs.
Also, global recognition programs should aim to bring out the best in people and motivate them to perform better in their roles. Companies struggling to retain employees need to consider creative ways to recognize their employees and ensure that there are opportunities for employees' professional development.
Source: Bersin by Deloitte
In part one of this article series, we analyzed the business impact of employee recognition. Several studies have shown that employee recognition contributes to better employee engagement, productivity, and performance. Also, 58 percent of HR professionals recommend that leaders recognize and praise their employees more often to help drive engagement.
In other words, employee recognition is a win-win for everyone. Employees experience a boost in morale and are motivated to improve their work performance, while the company experiences an overall improvement in performance.
Source: DaVinci Payments
Many millennials grew up receiving constant praise from their parents, showing that they were making progress and doing something meaningful. Millennials' expectation of regular praise isn't any different in the workplace. Millennials want to know that their contributions matter and they expect to receive immediate recognition for doing them.
However, most millennials are not happy with their companies' rewards and recognition programs. This means that the traditional or one-size-fits-all approach to employee recognition is not the right approach to use with millennials. To attract millennials to your company and retain them for a while, ensure that they will be doing meaningful work and that they will receive instant and regular feedback or recognition for their contributions.
In this Gallup employee recognition survey, 28 percent of respondents agreed that their most memorable recognition came from their managers. In comparison, 24 percent agreed that theirs came from the CEO or a high-level leader. The analysis adds that "employees will remember personal feedback from the CEO… In fact, acknowledgment from a CEO could become a career highlight." Going by this information, one would lean in favor of the manager-employee recognition structure.
However, as stated in the previous article about best practices for global employee recognition, it is important to make employee recognition multidirectional—from business leaders, managers, peers, or direct reports. It allows for an opportunity to get rounded feedback from everyone the employee works closely with, including external parties.
As part of our human nature, when we know that someone appreciates what we are doing, we feel motivated to do more and even better work. When leaders recognize employees for their contributions, they are positively reinforcing the desired behaviors, making them feel appreciated, and creating an environment of trust. Also, trust matters in the workplace because it makes employees more innovative and productive—they can give their best performance, which ultimately improves the bottom-line results.
According to insights from Deloitte's Business Chemistry, "today's employees want a relationship with their employer that is personalized, flexible, and customized, and they want to feel appreciated and valued for what they do." Saying "thank you" is a simple way to appreciate an employee in the workplace—and it can be expressed through cards, messages, gifts, or gift cards.
Have you checked out Xoxoday's Plum? It allows you to tell your employees or peers "thank you" through an all-in-one global catalog of over 20,000 of your favorite gift cards, perks, experiences, merchandise, and benefits.
Before the COVID-19 pandemic, many remote workers had reported feeling left out and unrecognized by their counterparts in the office. However, due to the pandemic, the percentage of full-time employees working from home increased in the US from 33 percent to 61 percent. Similarly, several workers around the world have had to work remotely, as well. It is not surprising that many remote workers are likely to feel forgotten while working away from the office. Employers can address this issue by offering simple ways for employees to recognize each other's contributions and leveraging technology platforms like Xoxoday.
Hopefully, you have found these statistics useful in understanding the importance of employee recognition. We invite you to schedule a demo and talk to our executives to find out why Xoxoday is the right choice for your organization.
You can also learn more about designing a good employee recognition program that can impact your company's financial results. Be sure to check out the next part of this series, which will explore total rewards and why it matters to the employee experience.