6 reasons employee recognition is good for business

Across all industries, frontline and deskless workers have faced many challenges in the last two years. Organizations are struggling with burnout, a lack of connection, and abysmal morale, with many workers choosing to leave their jobs in hopes of finding more fulfillment and growth elsewhere. 

As the great resignation takes hold and the competition for talent continues to mount, it’s become exceedingly vital for organizations to show how they value their employees.

And recognition tops the charts as the number one ask from employees in the post-pandemic return to work. Finding ways to weave a robust employee recognition program into your organization’s day-to-day is way more than just an HR play. It can positively impact your culture and, by extension, on the engagement and retention of key players – not to mention, of course, your bottom line. 

A quick primer on employee recognition: it comes in many forms but generally refers to how an organization actively applauds its employees’ work. Companies equipped with strong recognition programs are 12x more likely to see strong business outcomes. Just be sure to pay attention to who is doing the recognition. A Deloitte study of 16,000 employees revealed that 44% of employees value recognition the most from leaders above their direct supervisor. 

Let’s take a look at how you can build strong employee recognition programs that result in strong business outcomes. Here are 6 reasons employee recognition is good for business: 

1. Recognition drives engagement (and excellence!)

Employee recognition forms part of the bedrock of company culture that places exceptionalism and excellence at its peak; it helps foster appreciation and can empower each employee to do their best. Recognition fortifies relationships and provides team members with a clear purpose aligned to achievable company goals. 

Companies that promote a culture of excellence can trace their efforts back to higher retention levels, culture, and employee engagement and satisfaction. It connects your people and culture to a shared purpose. Companies that provide clear feedback and recognition also see positive, measurable impacts on employee engagement levels. The SHRM/Workhuman Employee Recognition study, for example, found that a whopping 84% of respondents said recognition positively impacted engagement. 

2. Recognition fosters employee retention

As we already mentioned, the labor crisis has left organizations struggling to retain loyal staff – and employee recognition is proven to be a major driver of retention. Why? Workers celebrated by their leaders are more likely to stay at an organization for the long term. Nearly 91% of employees say that a strong culture of recognition makes a company an attractive place to work. 

It even transcends financial motivations: employee recognition is cited as one of the top non-monetary factors for employee retention. One study even found that Companies with recognition programs had 31% less voluntary turnover than those without. Those numbers are hard to argue with. 

3. Recognition promotes productivity

Appreciation pays dividends. Recognition is instrumental in boosting employee engagement at an individual level, but it can also increase productivity, which drives business outcomes and can be tied to higher retention levels. 

How? What behavior gets recognized gets repeated. One study found that 92% of employees are more likely to repeat activities they receive recognition for. And 90% of employees say that some form of appreciation motivates them to put more effort in at work. And in companies that employ internal communication tools or have an employee recognition program, both employee productivity and performance are seen to be 14% higher. 

In other words: an employee recognition program is a great way to encourage (and scale!) the behavior you want to see – and discourage the behavior you don’t want to see. 

4. Recognition nurtures trust 

By recognizing your employees, you can help build trust with them – you can help them see that their company values both them and their contributions. And depending on the type of positive feedback you offer, you may increase trust in various business areas. For example, encouraging peer-to-peer recognition can lead to higher feelings of belonging, a more robust culture, and a 26% increase in engagement scores.

Why does this matter? Trust and efficacy go hand-in-hand. High levels of organizational trust and in the company as a whole can be linked to profitability. Trust is also a key component of employer branding, essential in this new age of talent search and retention. 

5. Recognition increases customer satisfaction (and profitability!)

Frontline employee recognition doesn’t just stay in the ranks of your employees. It trickles down to many other areas of the company and, in some cases, can have a direct impact on your customer experience. Here’s an example: By weaving recognition efforts and programs into day-to-day operations, The Walt Disney World Resort saw a 15% increase in staff satisfaction. Not only did that rise impact engagement, the results correlated with higher-than-average guest satisfaction scores at the resort. 

Here’s another one: U.S.-based superstore chain Meijer found that increasing employee recognition from twice a month to twice a week increased customer satisfaction by 5%. The same study found that the higher the employee recognition rates went, the  higher customer satisfaction was overall. 

Alas, the opposite is true, too. Less appreciation leads to lower engagement levels, and according to Gallup, disengaged employees have a negative impact on profitability. They tend to exhibit 37% higher absenteeism, 18% lower productivity, and, for the companies who employ them, 15% lower profitability. In dollars, that’s equal to around 34% of a disengaged employee’s yearly salary, or $3,400 of every $10,000 you pay them.

6. Recognition provides you with vital employee data 

Depending on the tools you use to run your employee recognition program, you might be able to gain access to a whole new arena of workforce analytics that can help you make data-driven decisions about your workforce, your processes, and the organization as a whole. 

Data derived via employee recognition programs provide an honest, impartial line of sight into the performance of your team and your company. Leveraging a communications platform (like Nudge!) to drive employee recognition gives you access to data on your top performers and scalable best practices that have garnered praise. This data can also show you regions or locations with low participation in your recognition program, which can be a red flag for disengagement or culture issues.

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When it comes down to it, people are more likely to repeat behaviors they are recognized for. If you seek to build a robust, profitable, and inclusive culture, an employee recognition program might be the solution.