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The Correlation between Employee Recognition & Retention

Luke Kreitner
6/13/23 9:00 AM

Employee recognition programs are a crucial part of workplace culture and can have a significant impact on talent retention. These programs aim to reward and reinforce desired behavior by recognizing and acknowledging the hard work, dedication, and contributions of employees to the organization.

Research has demonstrated that employee recognition programs are effective in increasing employee job satisfaction, motivation, and engagement, which in turn, leads to a more committed and productive workforce. It has also been observed that employees who feel valued and appreciated by their employers are more likely to stay with their current organization.

When compared to their undervalued counterparts, employees who receive recognition and rewards report high levels of motivation and engagement. For instance, a study by Glassdoor found that 79% of employees who received recognition and rewards felt motivated to work harder, while 63% felt more committed to their employer.

Moreover, companies with effective recognition programs have lower turnover rates. According to research, organizations with effective recognition programs have 31% lower turnover rates than those without recognition programs. Furthermore, studies found that these organizations experienced a 14.9% increase in employee engagement and a 12.5% increase in productivity.

In addition to improving employee retention, recognition programs can also have a positive effect on workplace culture and morale. Organizations with strong recognition programs tend to report higher levels of employee morale and job satisfaction. For example, a study by WorldatWork found that 85% of employees in such organizations were proud to work for their company, compared to just 49% in organizations without recognition programs.

To leverage the benefits of employee recognition programs, organizations must tailor their programs to meet the needs and preferences of their employees. They should integrate recognition and appreciation into the organization's culture and establish recognition as a regular practice.


The Impact of Employee Recognition on Engagement

Employee engagement is directly linked to worker interest and commitment, which are essential components of a thriving company culture. Organizations with highly committed workers may see increased output, job satisfaction, and lower turnover rates. 

Research indicates that recognition has a significant impact on engagement and retention as it's crucial for employees to feel valued and appreciated for their hard work. 

According to the Society for Human Resource Management, employees who receive regular praise demonstrate higher investment in their work and are more motivated to achieve company goals.


The Impact of Employee Recognition on Retention

Retention is a term that describes the ability of a company to retain its employees for a considerable amount of time. 

Staff turnover involves the expenses required to find, recruit, hire, and train new employees, making it a costly affair for firms. One potential solution can be for employers to show gratitude and recognition for their employee's hard work and successes. 

Research suggests that workplaces with a culture of recognition could potentially lower staff turnover by 31% compared to those with weaker recognition programs, according to a study by Aon Hewitt.


Specific Examples of Employee Recognition Programs

Businesses have multiple ways of displaying appreciation for their employees while also strengthening employee engagement. Some examples of employee recognition initiatives that prove to be effective can include:

Performance-based incentives: Employee rewards are based on their hard work and success. Behavioral technology, such as Rewardian’s rewards catalog, personalizes each employee's selection and redemption process. The catalog offers trending merchandise, experiences, and more, making it ideal for any employee.

Service Awards: After 5, 10, or 20 years of service, employees that have worked for a company for an extended period could be eligible for service awards. Alternatively, employees who exceed their responsibilities may receive “employee of the month/year” awards. Certificates, perks, and trophies are some examples of rewards presented to them regularly.

Peer-to-Peer Recognition Programs: Rewardian's recognition program is an exemplary initiative for employees to recognize and commend each other. The program promotes teamwork, allowing employees to publicly acknowledge and reward their co-worker's accomplishments via virtual high-fives or other recognition tokens. It's also considered one of the most effective types of employee recognition programs when it comes to engagement and retention.

Team Awards: Productivity and morale can be boosted by awarding teams for their collective efforts and achievements. Recognition can come in many forms, whether it’s through exemplary teamwork, project completion, or the attainment of predetermined objectives.


The Benefits of Employee Recognition

Increased job satisfaction: Employees who feel appreciated and valued are more likely to be satisfied with their jobs. According to a study by the Society for Human Resource Management, employees who are frequently recognized are more content with their work.

Higher motivation: Recognizing employees' efforts has been shown to increase motivation, leading to higher performance across the workforce. People are more likely to be driven to succeed when they feel their hard work is being acknowledged, according to the Institute of Management.

Reduced turnover: Appreciating employees reduces their motivation to leave their current position and can help to reduce turnover. Companies with a strong employee recognition culture have been found to experience 31% lower turnover rates than those with weaker recognition programs, according to Aon Hewitt.

Productivity boost: Publicly acknowledging employees for their efforts can lead to increased effort and efficiency. A study by the Harvard Business Review found that companies with formal employee appreciation programs outperformed those without such programs.

Improved employee relations: Recognizing employees can help to strengthen relationships between employees and their managers. The Institute of Management found that regularly recognized employees had better relationships with their supervisors.


Best Practices for Implementing Effective Employee Recognition Programs

Implementing an effective employee appreciation program can be a challenge, but with the right approach, it's possible to create one that benefits the business. To ensure the success of your employee appreciation programs, consider the following tips:

Define precise objectives: Establishing clear objectives for the employee appreciation program helps ensure that everyone involved is on the same page regarding what is expected and what constitutes a successful outcome. This helps ensure that the program is tailored to meet the needs of the business.

Gather input from workers: It's essential to get input from workers when creating employee appreciation programs since they can guarantee that the program is meaningful and relevant to employees. This can be accomplished through questionnaires, focus groups, or other methods of gathering information and opinions. Employee-management communication is also crucial for boosting employee retention.

Make it individual: When designing an employee appreciation program, each employee's needs should be considered individually. Therefore, it's crucial to tailor employee recognition to each worker's unique interests, preferences, and achievements.

Incorporate a wide range of recognition strategies: It's essential to incorporate a wide variety of recognition strategies to make employees feel that their efforts are valued and appreciated. Rewards can be anything from words of thanks, points to use on a rewards catalog, milestone achievements, promotions to special perks, and incentives.

Recognize and honor achievement: Recognizing and honoring achievement should be a cornerstone of every employee appreciation program. This can be accomplished through staff parties, award ceremonies, and other occasions that acknowledge and reward employees for their hard work.

Consistent recognition and reward programs: Consistent recognition and reward programs for employees are essential for keeping people feeling appreciated and valued in their jobs. Therefore, it's vital to provide appreciation regularly and consistently so that employees know what they are working toward and what they can expect regarding acknowledgment.



Recognizing employee contributions and achievements is paramount in driving engagement and retention rates. Businesses can leverage a range of methods for effective employee recognition, such as performance-based rewards, service/team awards and peer-to-peer recognition programs, which not only boost employee satisfaction and loyalty but also lead to a more engaged and productive team. By investing in employee recognition programs, companies can improve retention rates and solidify their position as an employer of choice.


Check out our recognition and rewards platform which provides organizations of all sizes with simple, customizable solutions to engage and inspire employees to perform their best.

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