Steve is the co-founder and CEO of award co, the fastest growing rewards and recognition company in the world.
Of worry With the economy on the brink of recession, many entrepreneurs expect the worst. Freezing new hires, cutting budgets and evaluating priorities are all prudent steps companies can take to prepare for reduced sales and revenue during these challenging times.
However, when companies start to consider cutting their employee recognition budget, things get a little more worrisome for me. Employee recognition is not only a useful, but ultimately replaceable feature for companies – it has the power to keep companies and their employees afloat during economic storms.
How can recognition be so effective in a time very similar to a recession? What is the ROI of recognition if done right?
Recognition improves retention.
Contrary to popular belief, the recent economic uncertainty has not resulted in slower turnover rates. In reality, 4.4 million Americans quit in April 2022, which is almost as high as the historical turnover rate last year during the height of the “Great Resignation.” High turnover rates still affect many companies, and with the economic uncertainty ahead, now is the worst possible time to lose talented employees.
Frequent, personalized recognition can turn the tide of retention and entice employees to stay. For example, 74% of employees who receive recognition only a few times a year say they want to stop within a year. But with higher recognition, turnover decreases 31%. Instead of cutting back on recognition budgets and pushing employees away, double down on recognizing and rewarding people for the good they do and the people they are.
When a company has a thriving culture of frequent recognition, employees will feel valued, valued and happy – in turn, making them much more likely to stay with the company longer. Simply put, when employees feel cared for, they will respond with more loyalty.
Recognition boosts morale and motivation.
Morality and motivation are inextricably linked. Employees who feel insecure, lack confidence in their future and have no purpose will not be motivated to do their best. That mindset then leads to poor results, negative feedback, or feelings of self-doubt. This lowers morale even more. It’s a vicious circle that can easily pick up steam in difficult times.
But regular recognition and rewards can help employees’ intrinsic motivation and performance. Best of all, token recognition — such as congratulation cards, certificates, or public shoutouts — is often just as effective as monetary rewards. The key is to make recognition personal and timely, and it should come from someone who knows and respects the employee.
In a nutshell, 82% of employees are happier when they are recognized at work. And when a company creates a culture of recognition, appreciation and celebration, that happiness will create higher morale and motivation for everyone — two things all businesses need right now.
Recognition increases productivity.
If lower income is a major concern, a business should definitely cut back on unnecessary expenses. However, they should also focus on getting the best results from their employees. One of the best ways to do this is with robust, effective recognition programs.
One study shows that “companies that excel on average in employee recognition” 12 times more likely to generate strong business outcomes.” Another study shows that: 40% of Americans would put more energy into their work if they were more recognized. Finally, the American Psychology Association found that: 93% of employees who feel valued are motivated to do their best work.
When employees feel recognized, they work harder. But when employees feel unimportant, undervalued, or unrecognized, they won’t do their best. Those facts show that the return on boosting recognition far outweighs the savings it generates.
Recognition during a recession: a crucial component
Businesses around the world are feeling the effects of the global pandemic, the Great Retirement, inflation and economic uncertainty. There is no panacea, panacea or panacea to solve all of these challenges, but employee rewards and recognition can be a big step in the right direction.
With effective recognition and rewarding rewards, employees will be more loyal, motivated and productive, not to mention feeling more confident, happier and valued. Use recognition to offset recession concerns for your organization and your employees.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.