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Recognition is a simple yet effective way to keep employees from quitting

Key Points
  • Companies that make employee recognition a priority have workers who are 56% less likely to be looking for a new job, according to a new Gallup/Workhuman survey.
  • Employees are also 73% less likely to feel burned out when recognition is offered.
  • However, 81% of leaders say recognition isn't a major strategic priority for their company.
Jose Luis Pelaez Inc | Digitalvision | Getty Images

As companies scramble to keep employees from leaving they're trying everything to make staying more attractive.

Higher salaries, bonuses for referrals, flexible work arrangements, and fun activities in the office are just some of the draws companies are using to keep workers from bolting.

However, there is something that is often missing in all this activity; something simple and fundamentally human: recognition.

At its most basic, companies that make recognition a core part of their culture offer employees gratitude, praise, and appreciation in a way that feels genuine and consistent. Workers feel that what they do matters and that the contributions they and their colleagues make are noticed and valued in a fair and equitable way.

As simple as that sounds, a recent Gallup/Workhuman study of employees in the U.S., U.K. and Ireland indicates that many companies aren't prioritizing recognition as a retention or engagement tool

  • 81% of leaders say recognition isn't a major strategic priority of their company.
  • 73% of senior leaders say their companies don't offer managers training for employee recognition.
  • Nearly two in three leaders say their company has no budget allocated to recognition programs.

The good news is that when companies make employee recognition a priority — and do it in a way that feels genuine and consistent to workers — the impact is impressive.

Employees are:

  • 73% less likely to "always" or "very often" feel burned out
  • 56% less likely to be looking for a new job
  • 44% more likely to be "thriving" in their life overall

For further proof that recognition can have a powerful financial impact, consider that Gallup's analysis of the data shows that an organization with 10,000 employees can save $16.1 million in turnover costs annually when they make recognition part of the culture.

Since Gallup began tracking employee engagement in 2000, it has been clear that recognizing employees is a key component of creating an engaging culture at work, said Ed O'Boyle, Gallup's global practice leader. "The findings [of the study] dive deeper into quantifying not only the financial benefits of strong recognition programs, but also intangible benefits like improving worker well-being and developing brand ambassadors," he said.

Be specific with recognition

Amy Freshman, senior director of global human resources for payroll giant ADP, said encouraging a culture of recognition can have a far-reaching impact for workers and the company.

Whether a company has a formal recognition program in place, as ADP does, or not, Freshman said recognition needs to be specific in order to have impact.

"Don't say 'good job,'" she said. "That doesn't really do anything. Tell the person the specific things they did, how you experienced it, and the impact it had on team members and the organization. When someone knows the difference they made, that's when they feel valued and they're more likely to want to stay."

One of the key findings of the Gallup/Workhuman survey is that employees sense when recognition is authentic and when it isn't. Empty words or gestures will be noticed by workers and can undermine the whole purpose of recognition, the report points out.

For companies that have a formal recognition program in place, it's crucial to regularly review metrics on participation to understand if employees find your recognition efforts useful and effective.

Maria Schmitt, Cleveland Clinic's executive director of HR operations, said the healthcare company launched an online recognition program for its 70,000 global employees in 2010. Each year, she and her team review its usage, including the number of awards that have been given out by managers and employees. She says so far this year, 68,539 awards have been given out, an 11% increase over 2021.

While the company strives to stay competitive with other healthcare companies on compensation, benefits, and work arrangements, Schmitt said effective, consistent recognition helps maintain a sense of belonging and camaraderie. "Employees who feel valued and thrive in their role are more likely to stay than those who don't create connections or achieve fulfillment at work," she said.

Workers don't want to feel invisible

At a recent Workhuman Live conference in Atlanta, the importance of recognition was a common theme as companies discussed how best to adapt to remote, hybrid, and return to office policies.

Celeste Warren, vice president of global diversity and inclusion at Merck, spoke about the huge value there is in bringing cultural awareness of employees' experiences to the workplace. "It's not just about their functional abilities," she said. "An employee has to be able to say 'I'm a scientist and I'm also a Black woman,' and that all has to matter."

Matthew Whiat, founding and senior partner of the Chapman & Co. Leadership Institute, spoke about the power that emerges when employees feel that their success and the success of their company are intertwined.

"Define what success looks like for each role in your company and then note and celebrate those wins," he says. "Humans want to be efficient. They want to know that what they're doing in their jobs is working and moving them forward. Organizations that don't acknowledge this are going to be a big disadvantage in the years ahead."

To join the CNBC Workforce Executive Council, apply at cnbccouncils.com/wec.