American businesses lose $1 Trillion a year to employee turnover and replacement costs. How do formal rewards and recognition strategies improve employee retention rates?
Anyone involved in the hiring process understands the challenges of recruiting vibrant new talent; however, a new struggle to retain that talent arises after the hiring process is complete. According to Gallup, the cost of replacing an individual employee can range from one-half to two times the employee's annual salary, costing American businesses one trillion dollars every year. It’s not just about significant financial losses, voluntary turnover also breaks down team moral and can mean lost customer relationships.
One of the most significant contributors to low retention rates is a lack of appreciative efforts for employee loyalty and achievements. Even if an associate seems like a perfect match for the company, an unappreciated employee won’t stay for long. Forbes reported that 66% of employees say they would likely leave their job if they didn’t feel appreciated – even if the position was otherwise a great fit for them. But what can be done to encourage an enthusiastic work environment to retain your top talent?
Many of us grew up understanding that rewards and recognition are associated with good work and behavior. Positive reinforcement has been a steadfast influence on work ethic and motivation throughout most of our lives – entering the workforce shouldn’t change that. Offering formal employee rewards programs lowers a business’ turnover rate by 31%. Just as a lack of recognition drives employees away from a company, appreciation efforts are a leading factor in employees choosing to stay with their current employers. Research shows that an employee who has recently been recognized is 63% more likely to stay at his or her current job within the next three to six months. Considering the potentially devastating costs of constant rehiring, the benefits of implementing reward and recognition programs cannot be overlooked.
Continue reading to explore different reward and engagement tactics proven to promote talent retention and drive business success.
Successful rewards and recognition strategies are multifaceted, starting with employee engagement efforts. Regardless of whether you staff four employees or 400, you should have an employee engagement strategy in place. From holiday parties to birthday shout outs, the impact employee engagement can have on morale, satisfaction, and efficiency can determine whether you manage a mediocre workplace or an extraordinary one. Many employers believe that the occasional word of affirmation or semi-annual workplace pep talk is enough to inspire and enthuse employees, but research shows they are wrong. In fact, an organization sees a 14% increase in employee participation, productivity, and performance when recognition-based employee engagement strategies are introduced. Employers can offer verbal praise, celebrate employees in team meetings, treat a team to lunch after a successful launch, provide training and mentorship programs, and so much more. Taking each opportunity to emphasize individual, team, and organizational wins ultimately leads to improved loyalty and commitment.
In addition to focusing on ways to engage employees day to day, long-term rewards strategies must also be included in efforts to minimize voluntary turnover. Recognizing major achievements, milestones, and tenure through rewards programs is one of the most practical ways to do so, while supplementing a positive workplace culture. We know that effective reward and recognition programs decrease employee turnover, but they can also amplify the quality of work produced. Organizations with formal employee recognition programs are twelve times more likely to have stronger business outcomes than organizations that don't have any program at all. Another notable benefit of rewarding employees for their outstanding achievements is the effect it has on the completion of future projects and assignments. Ninety-two percent of employees are likely to repeat a specific action if given recognition for it, underscoring the impact that acknowledgement can have on workplace productivity and accomplishments.
In addition to highlighting significant achievements, high-value rewards programs celebrate work anniversaries, promotions, and other important life events. For example, celebrating work anniversaries, from the first year to five- and ten-year increments, is a simple yet significant way to reignite an employee's passion. Other milestones, such as marriage announcements or the arrival of a new baby, can also be recognized to contribute to an appreciated, engaged workforce. Employees are far more likely to invest in the long-term success of your organization when they see your company doing the same for them through the recognition of their own personal accomplishments. Acknowledging the journey your employees have taken over time further enables them to visualize a meaningful future within your company.
Employee retention strategies have become the defining factor for companies across the nation when it comes to promoting long-term business success and prosperity. These strategies, which primarily focus on helping employees feel connected to their employers through appreciative efforts and recognition, encourage employees to feel more satisfied and engaged with their work, management, and the image of your company. Increased retention is just one of the many benefits of a well-designed reward and recognition strategy. Whether you want to implement a new reward and incentive program as an independent incentivizing tool or as an element of a larger program structure, Helm can help facilitate that growth.
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