Understanding the Impact of Employee Rewards and Recognition on Employee Turnover

Understanding the Impact of Employee Rewards and Recognition on Employee Turnover

When high performing employees leave an organization, it has far-reaching consequences both in financial terms and the overall performance efficiency. This single fact is responsible for making employee retention one of the biggest workplace challenges faced by organizations today. Most organizations today are constantly struggling to find an effective solution for this persistent problem that not only results in loss of money, time, and effort but also disrupts the smooth functioning of their organization. In this context, businesses often tend to overlook the importance of having efficient employee rewards and recognition program in place. Most organizations are unaware of the deep connection between employee rewards and retention and bear the cost of their ignorance in the form of loss of good employees.

Employee Recognition and Retention – How the two are connected

It is a common misconception that the employees seek only good salary, benefits, and other financial incentives from their jobs. Unfortunately, due to this improper understanding, many organizations that offer these financial benefits to their top employees are still not able to retain them. This is because most high performing employees crave for recognition and respect as much as they seek financial benefits. For such employees, rewards and recognition provide a sense of self-fulfillment which keeps them motivated to give their best performance. That is why organizations that lack proper rewards and recognition program for their employees may not be able to retain them for a long time.

As mentioned, employees need to feel valued and appreciated for their contribution to organizational growth. Having a proper employee recognition program provides an assurance of the same and enhances the overall engagement level of the employees:

Help motivate the employees

Being recognized for their efforts, initiatives and skills, makes employees feel motivated to repeat that behavior. The recognition and appreciation they receive also encourages them to further improve their performance to ensure that they are bestowed with greater rewards and recognition. Being valued for their work by the organization develops a sense of loyalty towards the organization and the thought of leaving the company takes a backseat in their minds.

Enhances employee happiness

When employees feel assured about the fact that their hard work is not going unnoticed, they tend to feel happier and satisfied with their work. Such employees are willing to take up even the most challenging tasks with a positive mindset and this naturally improves their performance. Most importantly, happy and satisfied employees are less likely to seek employment opportunities elsewhere.

Promotes a positive work culture

When employees feel happy and satisfied in their workplace they tend to develop a positive and friendly attitude. This helps in creating a fun-filled work culture based on mutual trust and understanding. The employees develop a strong sense of team bonding with their peers, juniors, and superiors which makes them reluctant to even consider the idea of leaving the organization and taking up a job with another organization. The reward program thus helps in improving the overall employee loyalty besides creating a growth-oriented work culture based on healthy competition between peers.

Better relations with superiors

One of the major reasons for employees leaving an organization is their poor bonding with their superiors. However, when the employees are appropriately recognized and rewarded for their efforts, they feel assured of the support and appreciation of their superiors, even if it is provided behind their back. This helps the employees to view their superiors from an entirely different and a mostly positive perspective. On their part, the managers and supervisors are able to better assess the skills and efficiency of the employees and hence are able to appreciate and acknowledge their efforts in a more open manner. This, in turn, helps in establishing a sense of mutual understanding and trust between the employees and their superiors and enables them to share a positive relationship.

Increased customer satisfaction level

When the employees are appreciated an acknowledged for their efforts, they tend to show a greater effort towards improving customer satisfaction levels. The rewards and recognition improve the employee motivation levels which, in turn, results in a significant improvement in their productivity and efficiency in terms of dealing with customers. Moreover, it also helps in improving the level of trust and camaraderie that the customers share with such employees, which in turn improves business profitability and growth. Such employees are often treated as the brand ambassadors for the organizations and can help in attracting more customers as well as the top talent for their company.

The above factors make it quite clear that while salary and other financial perks and benefits play a vital role in attracting top talent, its retention within the organization depends on the extent to which their efforts and contribution are recognized and rewarded,

Keeping Employees motivated during a recession – How Employee Recognition can help

Keeping Employees motivated during a recession – How Employee Recognition can help

With the threat of an economic recession looming large,  that will affect business organizations at large and their workforce the most, they face immense pressure due to insecurities resulting from the economic slowdown. When faced with such situations, cutting costs becomes the top priority for most organizations. This usually includes recruitment freezes, letting go of redundant employees and cutting back on bonuses or increases in pay. Such tough economic decisions along with the constantly looming threat of losing their job often reduce the motivation levels of employees and make these difficult times even more challenging for companies.  As such it becomes essential for organizations to develop the right strategies for keeping the employee motivation levels high to help them get through the difficult phase of an economic slowdown.

Employee Recognition during  an economic recession

As mentioned before, the primary objective of business organizations during economically tough times is to cut down their operational costs. For this most companies choose to discontinue any employee reward, recognition and other welfare programs that they might be running. However, according to most HR  experts, this might be counterproductive while trying to fight the recession. In fact, they are of the opinion that employee recognition can play an important role in keeping the members of the workforce motivated and maintaining their optimal performance and efficiency, especially during a time when the companies need it the most. And all at a much lower cost compared to double-digit salary increments. At the very least, just a pat on the back or a ‘Thank You’ might actually help.

Need for Employee Recognition during a recession

The most important thing that business organizations need to understand is that their employees can prove to be vital to help them survive through the economic downturn. Moreover, the employees also understand the need for their employers to reduce operational costs to overcome the shortage of funds caused due to a reduction in sale and profitability. Hence any cuts in bonuses or expected pay raises are in general acceptable to the employees during the economic slowdown. However, if their employers choose to cut back on employee recognition, it is likely to affect the morale of the workforce and might even make them question their commitment and loyalty towards the organization. On the other hand, the continuation of such programs can inspire the employees to stand by their organization through this difficult phase and give their 100% to ensure business sustainability.

Benefits of Employee Recognition Programs

Given the importance of employee rewards and recognition programs for the organization during the recession, it is time to take a look at the impact of these programs:

Offers an inexpensive solution for employee engagement

Contrary to the popular belief, employee rewards and recognition programs can be run even with a minimal budget. The primary aim of these programs is to assure the employees that their hard work and efforts are well-acknowledged and appreciated. The thought behind the reward is what holds significance for the employees, rather than the financial value of the reward itself. This is especially true during a period of economic recession, when the employees despite being deprived of the usual financial benefits, may still feel valued by the appreciation received through employee rewards and recognition program.

It paves the way for retention of talent

The lack of additional financial benefits and perks often makes the most talented employees feel dejected and disappointed with their employing organization. However, the presence of an employee recognition program gives hope to employees especially the top talent that the organization is still valuing them and appreciating them for their contribution to help the business stay operative despite the economic challenges. Even if the recognition is provided only in the forms of a few words of praise or a certificate of appreciation, it can go a long way in making these top talented employees stay with the organization during the tough times. These employees tend to develop a deep sense of belonging towards the organization, especially when the company continues to appreciate and reward their efforts in some way or the other, no matter how small the reward or recognition may seem to be.

Strengthens the bond between the employees and the management

Employee reward and recognition programs often require the participation of employees and help in improving their overall engagement level with the organization. Moreover, since these programs also involve members of the management, they help in establishing a channel of communication between the two. The management can use the recognition platforms to share their and concerns resulting from the bad economic scenario with the employees. The employees on their part can gain a better understanding of their expected role in helping the company emerge successfully from this economically challenging phase. This enhanced employee engagement helps in strengthening the bond between the employees and the management and enables them to work in a coordinated manner.

When it comes to keeping the members of the workforce motivated during the economic slowdown, employee recognition and rewards programs can prove to be one of the most cost-effective solutions for every organization.