Topic: Employee Recognition

The Business Case for Employee Recognition

Employees are 18x more likely to produce great work if they are recognized. —O.C. Tanner Institute

If you’re putting together a business case for recognition at your own organization, or even if you’re just starting the process of exploring recognition solutions, here are some of the key ways recognition can deliver measurable HR results.

The ideal employee recognition budget

First things first: Budgeting. After working with thousands of clients and carefully tracking their results, we’ve put together clear budgeting guidelines to ensure you get the most out of your investment.

Companies investing in employee recognition should expect to budget between $200-$350 per employee per year for maximum impact. Any more or any less creates diminishing returns on your investment.

The return on employee recognition

What return can you expect from your investment in employee recognition? Improved perceptions of leaders, lower turnover, greater innovation, and elevated employee Net Promoter Scores—and those are just a few examples.

Plus, studies consistently show that where there’s recognition, there’s profit. In fact, organizations with highly integrated recognition are twice as likely to have increased in revenue over the past year.

Capital One, a leading financial services company, launched its recognition program, powered by Culture Cloud, to its 51,000 associates and 145 business units across the company. With 75% of associates getting recognized, and more every day, employees have shared they are more motivated to contribute to the success of the company.

“The power of recognition and appreciation can impact engagement. It impacts attrition, it impacts net promoter score. There is a business return when you do it the right way.”
—Kelley Lynch, HR Director, Capital One

Here are some other ways recognition affects key HR and business initatives.

Boosting employee retention

According to Gallup, 51% of employees are actively seeking or watching for a new job. And replacing employees costs businesses time, productivity, and money.

  • The cost of replacing an individual employee can range from one-half to two times the employee's annual salary (a conservative estimate).
  • A 100-person organization that provides an average pay of $50,000 could have turnover-and-replacement costs of approximately $660,000 to $2.6 million per year.

Losing your best people often means losing your top performers, your best innovators, and your most effective problem solvers—people with the institutional knowledge to grow your business. Attrition also breaks down team morale and customer relationships.

Voluntary attrition of your best talent is worth avoiding at all costs. And employee recognition can help.

Here’s what the data says about the impact of recognition on attrition:

Improving employee engagement

Investing properly in employee recognition has a direct effect on employee engagement. When organizations invest $250 per employee per year for recognition, employee engagement increases 21% compared to companies that do not invest in employee recognition at all.

Explore the full study on employee recognition budget and employee engagement.

Employee recognition can help your organization reap the benefits of highly engaged employees, which include:

18% higher productivity, 23% higher profitability, 81% lower absenteeism, 64% fewer employee safety incidents

Increasing output

Productive employees drive output for your business, your customers, and your community. Fortunately, giving and receiving employee recognition increases productivity, according to global studies:

  • 84% of employees say the simple act of giving recognition inspires them to think about better ways to get things done.
  • Employees are 18x more likely to produce great work if they are recognized.

When asked, “What is the most important thing your company could do to cause you to produce great work,” the number one employee response was “recognize me.”

Invest in people, see impact

Investing in employee recognition is a powerful commitment to your people and your organization. If you are ready to take the next step in your employee recognition journey, check out our guide to choosing the right employee recognition partner.

Employees are 18x more likely to produce great work if they are recognized. —O.C. Tanner Institute

If you’re putting together a business case for recognition at your own organization, or even if you’re just starting the process of exploring recognition solutions, here are some of the key ways recognition can deliver measurable HR results.

The ideal employee recognition budget

First things first: Budgeting. After working with thousands of clients and carefully tracking their results, we’ve put together clear budgeting guidelines to ensure you get the most out of your investment.

Companies investing in employee recognition should expect to budget between $200-$350 per employee per year for maximum impact. Any more or any less creates diminishing returns on your investment.

The return on employee recognition

What return can you expect from your investment in employee recognition? Improved perceptions of leaders, lower turnover, greater innovation, and elevated employee Net Promoter Scores—and those are just a few examples.

Plus, studies consistently show that where there’s recognition, there’s profit. In fact, organizations with highly integrated recognition are twice as likely to have increased in revenue over the past year.

Capital One, a leading financial services company, launched its recognition program, powered by Culture Cloud, to its 51,000 associates and 145 business units across the company. With 75% of associates getting recognized, and more every day, employees have shared they are more motivated to contribute to the success of the company.

“The power of recognition and appreciation can impact engagement. It impacts attrition, it impacts net promoter score. There is a business return when you do it the right way.”
—Kelley Lynch, HR Director, Capital One

Here are some other ways recognition affects key HR and business initatives.

Boosting employee retention

According to Gallup, 51% of employees are actively seeking or watching for a new job. And replacing employees costs businesses time, productivity, and money.

  • The cost of replacing an individual employee can range from one-half to two times the employee's annual salary (a conservative estimate).
  • A 100-person organization that provides an average pay of $50,000 could have turnover-and-replacement costs of approximately $660,000 to $2.6 million per year.

Losing your best people often means losing your top performers, your best innovators, and your most effective problem solvers—people with the institutional knowledge to grow your business. Attrition also breaks down team morale and customer relationships.

Voluntary attrition of your best talent is worth avoiding at all costs. And employee recognition can help.

Here’s what the data says about the impact of recognition on attrition:

Improving employee engagement

Investing properly in employee recognition has a direct effect on employee engagement. When organizations invest $250 per employee per year for recognition, employee engagement increases 21% compared to companies that do not invest in employee recognition at all.

Explore the full study on employee recognition budget and employee engagement.

Employee recognition can help your organization reap the benefits of highly engaged employees, which include:

18% higher productivity, 23% higher profitability, 81% lower absenteeism, 64% fewer employee safety incidents

Increasing output

Productive employees drive output for your business, your customers, and your community. Fortunately, giving and receiving employee recognition increases productivity, according to global studies:

  • 84% of employees say the simple act of giving recognition inspires them to think about better ways to get things done.
  • Employees are 18x more likely to produce great work if they are recognized.

When asked, “What is the most important thing your company could do to cause you to produce great work,” the number one employee response was “recognize me.”

Invest in people, see impact

Investing in employee recognition is a powerful commitment to your people and your organization. If you are ready to take the next step in your employee recognition journey, check out our guide to choosing the right employee recognition partner.