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Recognition’s Role in Employee Retention

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People’s attitudes toward work have undergone a monumental shift over the past two-plus years.

According to the U.S. Bureau of Labor Statistics (BLS), American workers quit their jobs more than 106 million times between March 2020 and July 2022 – the “Great Resignation” – with over four million resigning in July 2022 alone.

As a result, the labor market is the tightest it has been in decades. Again using BLS figures, there were 11.2 million job openings in July 2022, but only 6 million among the ranks of the unemployed.

Employee engagement is also falling, especially across younger generations. According to Gallup data from early 2022, about a third of the American workforce is currently “not engaged.” That number increases to more than half (54%) when considering only Gen Z and younger Millennials born after 1989. 

The Importance of Engagement

In today’s labor market, it’s especially critical to achieving business goals that you hire the best talent and find ways to keep them happy so they’ll stick around.

Turnover is expensive – not just the cost of finding and training replacements, but also the hidden costs of having workers who don’t want to be there. At a minimum, the latter are not doing their best work, and they certainly aren’t being good brand ambassadors.

The cost of replacing an individual employee is higher than often realized, at one-half to two times the employee’s annual salary.

Even if you manage to retain them, disengaged employees cost companies $3,400, on average, for every $10,000 per year that the employees earn. 

Those are startling figures. But the astonishing facts don’t end there.

Business units that maintain highly engaged employees achieve 24% lower turnover in a high-turnover company than other business units in the same company. “High turnover” is a company with more than 40% annualized turnover.

The gain is even more dramatic in low-turnover companies (less than 40% annualized turnover), at 59% less turnover in highly engaged business units.

Engaged employees feel satisfied and appreciated in their job. They want to come to work daily and feel emotionally connected to their employer.

Using Recognition to Engage and Retain

Job seekers cite recognition for work as one of the primary reasons they are attracted to a particular company. 

Craving recognition is human nature. We look for recognition from parents, teachers, and friends from an early age. So strong is our need for positive affirmation that neutral responses are often perceived as negative. 

This holds in the workplace as well. Companies with structured recognition programs experience nearly a third less turnover than companies that don’t. 

The impact of engagement on employee performance cannot be denied. Again, quoting Gallup findings:

  • Highly engaged employees are 87% less likely to leave their employer voluntarily.
  • 69% of employees say they would work harder if they felt more appreciated.
  • 37% of employees say recognition is the most critical factor in job satisfaction.
  • Companies with high employee engagement are 21% more profitable and 22% more productive than their peers. 

And according to CNBC, employees in companies that have a culture of recognition are:

  • 73% less likely to “always” or “often” feel burned out
  • 56% less likely to be looking for a new job
  • 44% more likely to be “thriving” in their life overall

Businesses overwhelmingly agree (72%) that recognition has a significant positive impact on employee engagement. Companies that conduct sophisticated recognition programs are 12X more likely to experience robust and successful business outcomes.

Companies prioritizing employee recognition and delivering it to employees consistently and genuinely can make a huge difference in their engagement and retention figures.  

Your Recognition Experts

Rewarding employees for their contributions is highly beneficial to your bottom line and critical to employee retention. Make rewards and recognition a part of your culture, and you’ll create an engaged workforce that will stay with you long term. To help achieve your recognition and engagement goals, contact your recognition experts at Xceleration for employee rewards and recognition programs and software.

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