Employee disengagement and high turnover rates have been the main challenges facing organizations over the years. A number of studies have been conducted to determine the impact of a disengaged workforce on a business.
According to the state of global workplace report by Gallup, 85% of the workforce is either not engaged or actively disengaged. The failure to engage employees can lead to voluntary turnover which in turn impacts productivity and carries devastating financial losses. But just how devastating are these losses?—$7 trillion in lost productivity and $1 trillion to hire and train new replacements. In fact, the study suggests that the cost of replacing an individual employee is estimated to equate to between half a salary and two annual salaries. That’s a lot of money that could have been invested in keeping and growing the workforce, not losing them.
These alarming figures, coupled with the changing dynamics and expectations in the workplace, have pushed businesses to implement a number of HR strategies to stop the bleeding. Introducing the latest technologies in the workplace, providing continuous training and more flexible hours and implementing recognition and reward programs represent the most common tactics used by businesses to attract, engage and retain their most valuable talents.
In this blog post, we will explore the benefits a recognition program can bring to your business.
Reasons to implement a recognition program
Implementing a recognition program, or how I like to call it a recognition culture, can bring a number of benefits to your business. Such programs are widely adopted and are not expensive to implement.
Below are the main reasons why you should implement a recognition program:
- Your workforce is probably asking for it
With millennials and Gen Z progressively taking over the workplace, expectations have changed. A typical millennial employee expects to work for a company with a clear vision, a strong company culture and especially a management style that rewards their efforts.
According to the State of the Global Workplace report, 67 per cent of employees stated that they wanted more constructive feedback from management, with a further 72 per cent believing their performance would increase if the right feedback was provided.
- Increased productivity
Employees are the most important asset for any business. Keep your employees engaged and your business will most certainly flourish; ignore their needs and it will negatively impact productivity and your bottom line.
Increasing productivity is among the most obvious, yet important, benefits of recognition programs. According to a Gallup study, engaged teams can lead to a 10 per cent increase in customer ratings and a 20 per cent increase in sales.
It’s also important to highlight that, in addition to being recognized, employees expect a two-way communication with their managers and to be heard in order to feel empowered and motivated to perform their jobs—that’s according to a salesforce study that found that employees who feel they are given a voice in the workplace are 4.6 times more likely to give their best.
- A more engaged and satisfied workforce
Employee engagement represents the most crucial HR challenge facing businesses. This is why recognition initiatives of all types are increasingly adopted to tackle this issue.
Whether the recognition is written, verbal or tied to a gamification system with points and tangible rewards, it undoubtedly helps to engage, satisfy and motivate the workforce. According to a 2016 survey by Globoforce and SHRM, 90 per cent of workers stated that a values-based, peer-to-peer recognition makes them more satisfied with their work. Furthermore, one psychometrics study found that 58 per cent believe employee recognition is how managers can improve engagement and satisfaction in the workplace.
Companies that implement recognition programs have a 31 per cent lower voluntary turnover
SHRM / GLOBOFORCE Employee Recognition Survey
- Retain and attract talents
As mentioned earlier, voluntary turnover rates can have significant ramifications on businesses. Think of it this way: two businesses—‘A’ and ‘B—are part of an extremely competitive market. Company A managed to get the best talents out there thanks to its attractive offers and a robust recognition program. Company B, on the other hand, still deploys a managerial structure that is outdated with little to no recognition and incentives for employees to stick around. This situation will most certainly result in Company A achieving better financial results than company B, by retaining their best talents and attracting better-qualified individuals. According to a Deloitte study, companies that implement recognition programs have a 31 per cent lower voluntary turnover.
Recognition is a topic that’s been increasingly gathering interest from businesses in recent years due mainly to the changing dynamics in the workplace, increasing competition for talents and the new wave of new technologies. Implementing a recognition program can help businesses attract and retain the best talents and improve their overall productivity.