Research shows that employees are more likely to stay with a company if they feel that their efforts are recognized and appreciated. During economic boom times, employees felt they had other options and competition for employee talent was fierce. Today, we maybe in a weaker economy but this still holds true for your best employees. In the absence of an employee recognition program, your best employees are the ones most likely to jump ship.
Many times, senior executives are insulated from changes in employee morale. This is particularly true following the announcement of a major acquisition or ownership change, or the announcement of a change in strategy. The first step is to have a strategy for the senior management of the company to become attuned to what’s going on in the rank and file – without the filtering effect of middle managers who may simply be telling executives what they want to hear.
Return on Investment
Employee recognition is more than giving out cash bonuses and pay raises. In some cases, a small investment can pay large dividends. According to information from the Society for Human Resource Management (SHRM), 63 percent of organizations that start a formal employee recognition program reported increases in productivity, 61 percent believed employee engagement was significantly improved, and 58 percent believed they became more profitable as a result of their employee recognition initiatives.
Although other benefits may be important, pay will always be a factor. Good base pay, raises, bonuses, and the realistic prospect of advancement are still the cornerstones of employee compensation. But employees also want their company to be competitive as well – because they know that their long-term success is ultimately tied to their employer’s competitiveness.
So do your best to reward employees in cash, of course. But think beyond cash – there are lots of tools at your disposal:
The ways to reward and retain employees are endless. In fact, many of these solutions cost very little. Bob Nelson wrote a book called “1001 Ways to Reward Employees”, which is a great resource for any manager looking to implement unique employee recognition programs.
The Bottom Line
Money and resources that you commit to your employee recognition program would most likely be lost anyway – to competitors, bonuses to new hires, increased man-hours allocated to Human Resources and middle management screening, or by training new hires that are replacing the former experienced employees.
Benefits of an employee recognition program include reduced turnover, less time recruiting, interviewing and training new employees, improved institutional memory, more solid relationships with key customers because of the consistent personnel, greater efficiency, fewer lost clients and customers because of new employee snafus, and fewer opportunities for the employer to lose key relationships because the key employee took their contacts to a competitor.
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