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Companies are always looking for ways to increase their productivity and reduce expenses. Now, a new study from Gallup and Workhuman, a human resources software company, suggests that there's a relatively easy way for organizations to improve their return on investment: employee recognition.
According to the report "Amplifying Wellbeing at Work and Beyond Through the Power of Recognition," which was based on a study of 12,000 employees in 12 countries, positive employee recognition reduces burnout and improves performance. On the other hand, a lack of recognition can lead to financial losses: currently, some $20 billion is lost per 10,000 workers due to low wellbeing and subsequent low performance, for a total figure of $322 billion.
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"For a long time, employee wellbeing was oftentimes considered a 'bonus' or 'nice to have' for organizations looking toward significant growth and financial success," says Workhuman Chief Financial Officer Scott Dussault in a press release. "Times have changed – with quiet quitting and disengagement running rampant, leaders should be turning to employee recognition to increase engagement, productivity, inclusivity, and overall loyalty to their companies."
He adds, "Considering that the cost of voluntary turnover due to burnout alone is 15% to 20% of the payroll budget each year, protecting and promoting employee wellbeing amounts to hundreds of millions of dollars toward organizations' bottom lines annually."
Among the findings of the report, employees who are recognized at work are 10 times more likely to say they strongly agree they belong at their organization. That sense of belonging is key to employee retention: employees who don't feel like they belong are five times more likely to be job hunting, according to the new research, and they're also 12 times more likely to be disengaged from their work.
But despite the evident importance of appreciation, only a quarter of American employees say they felt they received adequate recognition at work.
Read more: The perks that work to retain employees now
The report notes that employee recognition improves employees' lives in four main areas. It leads them to evaluate their lives more positively; it reduces burnout; it improves day-to-day emotional wellbeing; and it increases social wellbeing at work. Overall, the report shows that employees who say recognition is a key part of their workplace culture were 91% more likely to be thriving than employees who reported recognition isn't central in their workplace.
"It is evident that recognizing employees boosts their wellbeing in many facets of their lives, and corporations need to make it a priority," says Ellyn Maese, a Gallup Senior Researcher, in a press release. "When incorporated strategically, recognition provides a foundation for employees to flourish."
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