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,

Employee Recognition should be an integral part of HR Strategy

Employee Recognition should be an integral part of HR Strategy

In today’s hyper-competitive business environment, organizations need to develop a highly efficient and motivated workforce to stay ahead. However, even the best performing employees may become inefficient or may choose to seek other employment opportunities over a period of time, if their skill and efforts are not acknowledged and appreciated in an appropriate and timely manner. Moreover, companies, where employee rewards and recognition do not form an integral part of the HR policy and company culture, tend to have a lower employer brand value. This makes it more difficult for such organizations to attract, recruit and even retain top talent for assured business success.

Changing Role of HR in Employee Rewards

There was a time when HR teams was deeply involved in setting up and managing an efficient rewards and recognition program for the employees. However, with the significant changes in the way organizations are run today, this important function of the HR has also undergone major changes. The involvement of the HR in deciding rewards and recognition policies has been reduced over time. This has happened as the HR teams today shoulder a wider range of responsibilities, leaving it to the line managers to recognize and appreciate their teams in whatever way they feel appropriate, without too much involvement of the HR team.

Making Employee Recognition an Integral Part of the HR Strategy

In the current scenario, where HR teams get to play in employee reward and recognition, they need to make these policies an integral part of the HR strategy. Whether it is in terms of attracting and recruiting new candidates or designing policies for ensuring better welfare and growth of employees, reward and recognition need to form the core of every HR strategy. Such an approach helps in ensuring greater success for the HR teams in their recruitment drives besides improving the overall engagement and motivation levels of employees across all levels. Some of the key benefits that organizations can obtain by integrating employee rewards and recognition programs into various HR strategies are as follows.

Enhances Employee Satisfaction levels

When rewards and recognition form an integral part of the HR policies,  employees tend to enjoy a greater sense of satisfaction in terms of receiving proper and timely acknowledgment and appreciation for their effort. This naturally helps in enhancing their happiness levels and motivates them to be more productive and efficient. It also promotes a deeper sense of loyalty and belonging among the employees, who feel valued by their organization and their supervisors and peers.

Attracts Top Talent for Key Roles

Most top professionals today prefer to work for organizations where their commitment, skills, and efficiency are acknowledged and appreciated. Hence organizations with employee reward and recognition as an integral part of their HR strategy are likely to attract such top-rated professionals more easily. Organizations having a global workforce can also benefit from such strategies.

Improves Employee Retention Rates

Employee turnover is one of the major HR challenges faced by organizations today and in a majority of cases, poor rewards and recognition are the cause of high turnover rates. By adopting an HR strategy rooted in effective recognition policies, organizations can overcome this challenge and improve employee retention rates. Receiving timely appreciation and rewards helps in keeping the employees motivated and strengthening their bond with the organization and minimizes their chances of seeking other job opportunities.

Create an Environment of Self-Improvement

HR strategies that integrate efficient reward and recognition programs help in creating a workplace environment that inspires employees to develop an attitude of self-improvement. Watching their peers getting recognized for their efforts, innovation, and skills proves to be a great motivator for employees to improve their performance and efficiency and attain similar rewards and recognition. It also helps in developing a culture based on healthy competition where professionals inspire and support each other to achieve individual and organizational growth objectives.

Ensure Better Return on Investment

Most modern organizations, having a multi-cultural workforce,  invest a considerable amount of time and effort in employee development and engagement. However, the lack of a proper reward and recognition policy make all these efforts futile and provide minimal or zero returns on investment. Integrating their reward and recognition programs with key HR strategies assures business organizations of gaining a better return on investment through enhanced employee performance and efficiency. Such strategies boost the morale of the workforce and maximize their contribution to business success.

Integrating employee rewards and recognition with the HR strategy, helps organizations to achieve the objective of developing a talented and dedicated workforce committed to achieving organizational growth objectives.