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Why Employee Recognition Matters for Retention – and How to Do It Right

While employees are rewarded for their hard work through pay, there's something more meaningful about receiving appreciation and recognition for a job well done: a mention in a meeting, a company-wide email, an award at the Christmas party, or just a simple pat on the back.

Employee recognition is so powerful, in fact, that these simple gestures can lead to your team working better and harder, and your best employees stay longer.

In this guide we'll take a closer look at the importance of recognising employee efforts - including the boost this can give to levels of employee engagement, retention and general business performance - and the best ways to do it.

What Is Employee Recognition and Why Does It Matter?

Employee recognition is the practice of acknowledging and appreciating worker contributions, efforts and achievements. It can take any number of forms: verbal/written praise, public acknowledgement, rewards or bonuses.

When done well, employee recognition boosts morale, makes workers feel more engaged with the organisation, enhances the satisfaction they feel in their roles, and fosters a positive workplace culture.

The stats prove it. Employees who feel unappreciated are twice as likely to quit within the next year than those who feel appreciated. Companies with strong recognition programs, meanwhile, experience a 31% lower voluntary turnover rate.

These stats are backed up by worker surveys. One in three employees say that a lack of recognition is why they're thinking of leaving their current employer, and the same number say they'd consider staying with their employer if they received more recognition.

A culture of employee appreciation and recognition makes your employees feel valued, which in turn makes the best less likely to leave.

4 Key Benefits of Employee Recognition for Retention

Reduced turnover and hiring costs

As mentioned above, when you recognise the efforts of your workforce, you reduce employee churn. And with the average cost of hiring a new employee in NZ sitting at $23,860 as of 2023, keeping your best workers also means saving a huge amount of money on recruitment.

Improved morale and engagement

According to Gallup, employees who receive great recognition are 20x more likely to feel engaged in their workplace than employees who receive poor recognition. This engagement also bleeds into morale - when managers regularly recognise great work, it makes for a happier environment.

Greater team cohesion

A culture of recognition might begin at the top, but it can quickly bleed through your organisation, inspiring employees to recognise each others' efforts. This creates a more communicative, cohesive, collaborative group that is better at identifying when colleagues are struggling, and more willing to offer support.

A more successful business

90% of employees say that recognition for good work motivates them to put in more effort, creating a virtuous cycle that leads to ever better work driven by ever more recognition. The result: far greater efficiency, quality and productivity, which ultimately leads to a more successful business that your best workers will want to continue working within.

Common Challenges in Recognising Employees

The message is clear: employee recognition can be incredibly valuable for retention - but only if it's done the right way. Effective recognition can be surprisingly tricky, headlined by the following challenges:

  • No plan or structure: If you fail to plan you plan to fail. Effective recognition requires a carefully structured program that ensures appreciation is delivered consistently, fairly and in a way that resonates with workers.

  • Lack of budget or leadership buy-in: Without the necessary budget or buy-in from leaders, you won't have the resources required to set up an effective recognition program.

  • Generic or insincere recognition efforts: As soon as appreciation and recognition becomes a chore or a check box, it stops being effective.

Proven Employee Recognition Strategies for New Zealand Businesses

What exactly does employee recognition look like? Here are a few examples of proven approaches that you can include in your strategy:

  1. Team shout-outs: Set aside a portion of team meetings and group emails to acknowledge recent efforts and achievements.

  2. Personalise your appreciation: Tailor your recognition to the individual. An introverted worker might appreciate a handwritten note more than a shout-out at an all-hands meeting, for example.

  3. Establish an award: Implement an "Employee of the Month" or peer-nominated award that more officially recognises efforts.

  4. Offer rewards: Incentivise high performance by offering extra leave, gift cards and other employee benefits to those who earn recognition.

  5. Development opportunities: Show your appreciation by investing in your employees' career paths, through industry courses, workshops or mentorship programs.

  6. Social celebrations: Celebrate milestones, achievements and general good work with team lunches, office events or fun after-hours activities.

Recognition: the key to employee retention

We humans can be rather simple creatures. Hearing 'thank you' or 'great job' can have a huge effect on how we view and approach our work.

Recognition inspires passion, energy and commitment. When you recognise and show appreciation for your best workers, they're far more likely to hang around. A pat on the back can be even more effective than a salary hike when it comes to employee retention.

Better yet, you could reward great work with 1Team. We help your business treat high performing team members to a range of perks, such as savings from New Zealand's leading retailers (Torpedo7, Dulux, Pita Pit, Hirepool, Repco, Warehouse Stationery), all delivered through an app with your branding.

Ready to recognise, reward and retain your best workers? Get started today.




 

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