How recognition supports retention

Posted by Mike Ryan

The cost of talent can be a big business expense. Organizations spend most of their operating budgets on wages and benefits. Add it all up—salary, sick leave, health insurance and holiday pay—it totals up quickly. Companies use base wages and bonus schemes to entice, inspire and retain their employees. But is pay, by itself, enough to get the job done?

Are competitive salary structures the answer?

According to, 44% of employees say the need to earn more money was the main reason they were looking for a new job. That’s a pretty high percentage.  But that number needs to be taken in context. It also suggests that more than half are looking for reasons that don’t necessarily translate to a bigger paycheck.

Making more money will always be a priority for current or future employees. That’s one reason why businesses need to be competitive in their salary structures. But is offering an on-par wage enough to stand out in a highly aggressive labor market? If not, what’s the answer?

When you add it to the compensation mix, employee recognition programs can be a lot less costly (and a lot more effective) than throwing more money at workers. Both World-at-Work and SHRM say that recognition budgets ranging from 0.5%-1½% of aggregate payroll expenditures often get the job done. And compared to cash alone, employee recognition investments can have a higher impact on retention (along with other returns they may not be getting enough credit for).

Integrating a recognition program into your company can help you achieve the deliverables you need to get the most from your employees

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An extra benefit of retention? Holding onto “organizational know how”

Employee recognition makes employees feel better about what they do and who they do it for. Simply stated: Appreciated employees feel better about their career choices.  They are happier and more connection to their work. It also means they are two-thirds less likely to look for employment opportunities elsewhere.

Employee recognition (applied often and in a timely manner) does more than help keep people at companies—it builds up “organizational know-how”.

How so? Recognition rewards workers when they do good things in support of the business. And the steady stream of positive reinforcement encourages repetitive conduct. Acts of recognition spark growth on an individual level, of course, but they also help to disperse best practices across the entire enterprise. Even the smallest acts of recognition can act like force multipliers that distribute and expand knowledge throughout the ranks of the company.

What does that mean exactly? As employees are recognized for applying their skills three additional things are bound to happen:

  1. They feel more confident in their abilities and, as a result, are more apt to take on new challenges
  2. Their actions are observed by others and those acknowledged  “best practices” begin to take root across the organization
  3. The institutional knowledge that companies work so hard to cultivate is preserved within the organization because recognized workers are far less likely to defect from one job to another.

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Creating a positive voice that lures new recruits

The majority of candidates check on a company’s reputation before they go through the rigors of the recruitment process. Leveraging the wisdom of crowds, 79% of job seekers are apt to visit job boards or tap into some other form of social media during their search. Sixty four percent say they research what current employees have to say about their situations, while 37% admit they will move on to other opportunities if they can’t find enough good things said about the company.

This is where recognition adds an ancillary benefit to your business. Job hunters know that employees who feel good about what they do (and who they do it with) will talk up the company and its working environment. Positive employee reviews pose a real advantage to companies looking to attract top talent. Negative postings, of course, have the opposite effect.

If potential candidates don’t like what they see, chances are they’ll look somewhere else, even if the potential new job offers a raise in pay. In fact, more than half of all candidates say they would never work for a company with a bad reputation—even for more money.

The impact existing employees play on a potential worker’s job search cannot be understated. And that role is just another example of how employee recognition leads to an additional advantage for your company—one you may not be giving enough credit to.

To discuss how our employee recognition services can benefit your organization, contact us today. Or check out how we have successfully implemented reward solutions in these businesses.

A 25 year industry veteran, Mike is responsible for expanding CR Worldwide’s business portfolio in the United States.