Employee recognition feels good, but does it get results?
We know most American workers still don’t get enough on-the-job recognition. Only one in three employees in the U.S. strongly agree that they received recognition or praise for doing good work in the past seven days, according to an analysis of Gallup’s latest employee engagement poll.
“At any given company, it’s not uncommon for employees to feel that their best efforts are routinely ignored,” Gallup’s Nate Dvorak and Annamarie Mann write.
Lack of recognition can have costly consequences. Ignored employees don’t wait around for a “thanks” from their bosses.
“Employees who do not feel adequately recognized are twice as likely to say they’ll quit in the next year,” according to Dvorak and Mann.
So what happens when employees are adequately recognized? Let’s dig into the latest research on employee recognition programs and their measurable effects on the bottom line.
Employee Recognition: ‘One of the Greatest Missed Opportunities’
Dvorak and Mann call employee recognition “one of the greatest missed opportunities for leaders and managers.” Among the benefits of regular recognition:
- Gives employees a sense of personal accomplishment and value.
- Boosts engagement.
- Increases productivity, loyalty and retention.
- Sends a message to other employees of “what success looks like.”
- Reinforces the desired culture of the organization.
Gallup’s findings show that employee recognition is a “low cost, high impact” strategy, driven by a commitment from leaders to express appreciation and encouragement.
Recognition also fuels innovation. According to O.C. Tanner research, employees who receive strong recognition are 33 percent more likely to be “proactively innovating,” generating twice as many ideas per month compared to those who aren’t recognized well. Further, companies that provide effective performance recognition are more than twice as likely to be highly innovative overall.
Innovation thrives in a trusting environment, so it’s not surprising that workplaces with strong recognition have higher levels of trust among employees.
“Recognition done well increases managers’ trust, communication, accountability and goal-setting attributes,” according to O.C. Tanner. In a survey, 87 percent of employees who receive strong recognition reported a strong relationship with their direct managers. Among those receiving weak recognition, only 51 percent reported the same.
Finally, with O.C. Tanner’s research, we also now know exactly how much longer well-recognized employees stay with their company.
Employees who receive service rewards stayed an average of 6.7 years at their previous job; employees at jobs without service rewards stayed an average of just 4.7 years!
The Employee Recognition ROI
So, how much does a company need to spend to get these great recognition results?
Between 0.5 to 2 percent of payroll budget, according to estimates from O.C. Tanner and Globoforce.
An investment that amounts to just a fraction of payroll budget “can have a ‘best-in-class’ program that improves engagement and retention,” Globoforce’s Katie Scott tells Bloomberg BNA.
Interestingly, big recognition expenses like an annual cash bonus don’t have the same ROI as smaller but more frequent investments.
“Giving an employee a $5,000 annual bonus is a significant expense for a company … but it only results in a month-long increase in engagement. It’s much better to cut that bonus up into smaller pieces and reward the employee throughout the year, resulting in a continual boost to his or her engagement,” according to Scott.
Employee recognition budgets can stay so low “because giving recognition is free,” TINYpulse VP of employee engagement tells Bloomberg BNA. He points out that it doesn’t cost anything to send a congratulatory email or to recognize someone in person or at a company event.
A Culture of Recognition Is Top-Down
Gallup’s data reveal that the most effective recognition is honest, authentic and “individualized to how each employee wants to be recognized.” Also — it isn’t about the money.
The key to great employee recognition is not how much a company spends but how the recognition is communicated — namely, “what makes it meaningful and memorable for the employee and who is doing the recognizing,” Dvorak and Mann write.
Gallup asked employees in a recent workplace survey to recall who gave them their most meaningful and memorable recognition. The results show just how important it is for recognition to come from the top. The survey found that the most memorable recognition came from:
- An employee’s manager (28 percent)
- High-level leader or CEO (24 percent
- The manager’s manager (12 percent)
- A customer (10 percent)
- Peers (9 percent)
“Even a small amount of time a high-ranking leader takes to show appreciation can yield a positive impression on an employee. In fact, acknowledgment from a CEO could become a career highlight,” Dvorak and Mann write.
Commit to Building a Culture of Recognition
Employee recognition is vital for your employees and the health of your business. Commit to finding frequent low- and no-cost ways to acknowledge, engage and appreciate your workforce. Download our free eBook “The Ultimate Guide to Employee Gift-Giving” for more in-depth learning to help you craft the recognition plan that works best for your organization and culture.
And don’t miss our additional free resources for building a vibrant and sustainable culture of workplace gratitude!
About gThankYou, LLC
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