Employee recognition programs may seem like an unnecessary effort, especially for companies that may be resource-constrained or focused on growing their products. But growth is difficult to achieve if employee turnover rate is high, as departing staff take with them useful institutional knowledge and training. Staff retention, whether your organization sees it or not, is rooted in morale.

 Lack of appreciation was cited as the main reason for 79 percent of employees who left their jobs during a decade-long study conducted by O.C. Tanner. Employees want to be recognized for the work that they’re doing. And if they’re not, they’re willing to leave to find a job that does.

This paints a bleak picture of employee retention, but workplaces can adapt by engaging with and recognizing employees with appreciation programs. In fact, a survey of 614 employers found that turnover rate was 13 percent lower at companies with recognition strategies.

Why are these programs so successful? Here are our thoughts:

1. It’s Not Just About Money

Although salary can be a major contributor as to how valued an employee feels at their company, it’s not the main cause of staff turnover. More than 200,000 employees worldwide ranked recognition, relationships, and work-life balance as higher priorities than salary in a study conducted by Boston Consulting Group.

This is because workplace morale centers around day-to-day interactions and tasks. An employee is still likely to leave a job, even if they believe they are being paid fairly, if their day-to-day experiences at their workplace are mostly negative. Recognition programs are a way to explore the daily experiences of employees, highlighting achievements in challenging situations that would otherwise be viewed negatively.

2. The Employee-Company Connection

No workplace is without its challenges. But employers can build positivity around these situations by acknowledging the challenge and recognizing employees who navigate it. This, in turn, lessens negativity in the workplace and creates happier employees. One study found that happy employees can be up to 20 percent more productive than those that are unhappy.

Productivity is not the only benefit here, though. A happy employee is more likely to stay in a job that they enjoy, in part because of an elevated feeling of self-worth in relation to their ability to contribute to the company. This establishes a direct connection between the employee and the company that is crucial to retention. Employees that feel intrinsically fulfilled with their work in relation to the success of the company are more likely to stick around.

3. Strengthening Peer Culture

Employee recognition programs don’t just strengthen the relationship between a manager and an employee - they build bonds among coworkers too. While an employee/manager relationship is important for a healthy work environment, employees are more likely to directly relate to their peers and socialize with them. In fact, TINYpulse’s 2018 Report on employee recognition and appreciation found that 70 percent of employees credited their peers for creating an engaging environment, while other office amenities only accounted for 8 percent. Encouraging coworkers to recognize each other’s achievements can ultimately lead to a happier work culture.

This culture can also lead to stronger collaboration between peers. Coworkers who have taken the time to recognize each other’s strengths in the workplace have an advantage when taking on large-scale projects. Employees feel empowered by their identified strengths and can take on delegated tasks in a positive light, which shows a direct correlation between workplace culture and increased productivity.

4. Creating Future Leaders

Mid-level management can be tough, depending on the workplace. Being in the middle of organizational leadership and employees can create stresses that are both professional and personal. Employee appreciation programs are a perfect place for these roles to be recognized by both sides - from those being managed as well as higher-level leadership. Mid-level managers that are recognized are more likely to stay in their role, creating loyalty for the company and ultimately a path for them to advance into leadership roles within the organization.

This is especially important for the health of a company, as high turnover rates at a managerial or leadership level can have severe consequences. Entire projects and/or office culture can be altered with the departure of a leader. Although new employees in these roles can provide a fresh perspective, a revolving door of people in these roles creates a lack of consistency and costs time and money. In fact, when an employee leaves, it can cost companies 150 percent of the annual salary associated with the position to replace them, according to TINYpulse’s 2018 Report. Recognizing and nurturing employees to grow into leadership roles provides organizations with a steady executive team, and less hits to company budget.

5. A Culture of Heroes

Recognition also creates an opportunity to publicize the importance of an individual employee’s work with regards to the overall success of the company. Recognition programs can give employers a platform to show this, making the employee the “hero.” Stories such as these are far more likely to be remembered than a standalone bonus.

The concept of creating heroes can multiply the positive effects of recognition. Not only does the employee feel rewarded by their managers, but congratulations from their peers makes for an even more positive experience. This also creates a sort of exclusivity around these “heroes” - coworkers may admire how their peer handled a tough situation and strive to be more like them when faced with challenges going forward. This type of recognition can have a domino effect for employees pursuing success in the workplace - TINYpulse’s 2018 Report found that employees that are well-recognized rate their coworkers 13 percent higher than less well recognized coworkers.

The hero image, however, needs to be done with caution. Mass publicizing of an employee hero can make them feel odd in relation to their peers, if done inauthentically. Some gamification recognition platforms have emerged as an answer to this, allowing employees to be recognized in a way that is still public but less brazen. For example, a total number of “likes” for a given achievement can still create the hero domino effect without the risk of intimidating peers.

6. Engaging Employees in Culture

Creating recognition programs in coordination with employee feedback gives staff an opportunity to play an active role in company culture. Strategies for engagement could include an employee culture committee, or surveys about staff preferences for implementing recognition programs.

Employees engaged in the process feel more connection to it, a sort of co-ownership of the program rather than a top-down approach to implementation. As stated earlier, the power of peer-to-peer culture is as important, if not more important, than the relationship between managers and employees. If employees feel as though recognition programs, and ultimately office culture, are guided by peers, they are more likely to participate and strive for achievements relating to their day-to-day work.

7. Creating Professional Growth

Employee recognition programs can be an opportunity to offer professional development, another contributor to staff retention. Professional development as a part of recognition can make an employee feel even more valued - not only is their employer recognizing their achievements, but they are also investing in their professional growth.

Professional development also creates the opportunity to retain staff by promoting from within. By offering training to current employees, employers allow staff to adapt to changes in an organization. This gives employees the skills they may need to apply to a new position within the company, furthering current retention.

8. Solving Other Problems

Effective employee recognition programs can also serve as a cornerstone for addressing other issues in a company’s culture. In “The Carrot Principle,” author Adrian Gostick identifies four key areas for effective leadership: goal setting, communication, trust and accountability. If an organization is struggling in one of these areas, it can be difficult to think how recognition will have a direct correlation with these issues. But in fact, it does. One study found that even in workplaces where there may be a low opinion about a given part of these “Basic Four” principles, strong employee recognition leads to higher engagement. This engagement, in turn, creates a forum for addressing these issues.

For example, if communication is viewed as a pain point at a company, employees who feel recognized and rewarded by their work are more likely to participate in efforts to improve communication. Their positive views of their contributions to the company can lead them to want to take part in improving processes, such as communication, to make their work easier and more effective.

Remember to Be Authentic

It’s important to remember that there’s not a one-size-fits-all employee recognition program. Every organization has a different culture. As Sabrina Son wrote on TINYpulse blog previously, recognition programs need to account for these, or they can feel inauthentic and even become detrimental to workplace culture. Gallup found that recognition tools implemented without consideration of company culture were ineffective, as they were only used by employees already highly engaged with the company.

Ultimately, employee recognition programs have a strong correlation with staff retention, if done in consideration of a company’s culture and values.