Recognition benefits reduce turnover, boost engagement, recruitment
Everyone enjoys a little employee appreciation, and it is no surprise that when employees are rewarded for their good work they are more likely to stick around at a job. A recent study by Globoforce and SHRM, “Employee experience as a business driver,” confirmed this notion.
The employee recognition survey found the top three workplace management challenges faced by organizations are retention, engagement and recruitment. If businesses can dedicate 1% or more of payroll to values-based rewards and recognition, they are more likely to perceive greater positive impacts on retention and financial outcomes.
“In order to be successful, organizations need to win the hearts and minds of employees,” says Eric Mosley, CEO of Globoforce. “A more human-centric approach, where employees are treated not as human capital, but as people fosters greater humanity and creates more positive employee experiences. It’s also crucial for HR leaders to take a fresh look at compensation structures and evaluate the value they bring to employees and their respective companies. As our study shows, social recognition can directly impact employee experience and financial outcomes.”
For the second year in a row, retention topped the list of HR challenges at 46%. Keeping talent from leaving companies has nearly doubled as a concern over the years, with only 25% of businesses listing it as a top challenge in 2012.
The ratio of unemployed persons per job opening was 1.4 in September 2016 — nearly the lowest since January of 2001, according to the Bureau of Labor Statistics. This ratio peaked at 6.6 in 2009 and has been steadily declining ever since.
Because of this shrinking number, workers are less likely to tolerate a less-than-satisfactory experience at work for the sake of job security. This means that workers have more confidence — and more options — to look at better opportunities outside of their current employer.
The financial implications of voluntary turnover cannot be overlooked. The true cost of voluntary turnover not only involves direct costs, such as cost per hire and first-year orientation and training, but also includes the interim reduction in labor costs and lost productivity costs, according to a report by research firm Bersin by Deloitte.
In total, it is estimated that organizations lose more than $100,000 for every employee who leaves, and this does not include other indirect costs such as lost client relationships, institutional knowledge and pervious training for the employee leaving.
As for engagement, At least 36% of businesses surveyed see engagement as a top challenge. Highly engaged organizations have lower absenteeism and turnover, according to a separate meta-analysis by Gallup of more than a million employees.
In 2016, recruitment topped succession planning as the third-most cited organizational challenge at 34%. This means advisers and HR professionals are finding it difficult to fill open positions. The number of job openings in the United States peaked at 5.9 million in July 2016 and saw little change in September 2016 at 5.5 million, according to the study.
Recognition and organizational values
Since Globoforce and SHRM jointly initiated the survey in 2011, there has been a steady increase in the number of businesses with value-based recognition programs — where employees are given recognition for specific actions that demonstrate a company’s core values.
In 2016, 60% of organizations had a values-based recognition program, up from 50% in 2012. Conversely, there has been a steady decrease in the number of organizations with recognition programs not tied to values, down 21% from 27% in 2012.
Recognition programs outperform other programs on every metric, according to the study. Results showed that clients are more likely to report impacts such as:
· 32% more likely to deliver a strong return on investment
· 31% more likely to instill and reinforce corporate values
· 31% points more likely to maintain a strong employer brand
The results also showed greater perceived impacts on learning and development, sustainability, culture management and financial results.
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Companies that spend 1% or more of payroll on recognition are nearly three times as likely to rate their program as excellent, compared to companies that spend less than 1%. In contrast, companies that spend no budget on recognition are five times more likely to rate their program as poor.
Clients with value-based programs at 1% or more of payroll are 3.5 times more likely to say their program helps attract new job candidates. They are also nearly two times as likely to report it delivers a strong return on investment and two times more likely to help retain employees.