In the face of the Great Resignation, it’s clear that companies aiming to recruit and retain workers should look to offer the most meaningful recognition and incentives possible. According to Workhuman’s most recent Human Workplace Index, a monthly survey analysis of 1,000 full-time workers, 91% of employees would be encouraged to stay at their company longer if they received an annual bonus or similar financial incentive.
But rather than solely relying on end-of-year financial pay outs and hoping for the best, organisations should consider restructuring their recognition and reward strategy to achieve the most impact.
Frequent rewards keep employees engaged
Workhuman research shows that distributing rewards out over the course of the year keeps employees engaged and dedicated more than a one-time annual bonus. In ‘Making Work Human’, co-authored by Workhuman CEO, Eric Mosley and myself, we explain why this is the case by presenting an example.
Imagine that a company has given high-performing employee, Emily, a £3,000 annual bonus. Research tells us that the psychological “glow” of good feeling, engagement, energy, and attachment to the company from that award lasts about three or four weeks. After that, Emily’s emotional attachment to the organisation returns to its previous baseline.
Compare that result to the impact of regular £50, £150, or £300 awards given throughout the year, based on recognition from people throughout the organisation. Rather than a faceless, once-yearly award coming from ‘the company’, these awards are a direct result of colleagues showing in-the-moment gratitude for specific actions and contributions.
Which would you prefer? It seems logical that most people would choose option two, and the research supports this, with psychologists concluding that the frequency of positive reinforcement is more important to human happiness than its intensity.
(E-)Thanks isn’t enough
Further, it’s the combination of recognition and rewards that generates the best results. When it comes to employee turnover, Workhuman’s analysis of more than 700,000 employees across 32 programmes revealed that rewards backed with tangible value are 20% more effective than e-thanks alone. And in fact, a worker receiving 5 or more e-thanks awards is 3% more likely to leave the organisation than a worker who receives no recognition at all – meaning that programmes that consist solely of e-thanks do more harm than good.
The research also shows that employees who choose a tangible gift or experience enjoy three times more perceived value from the reward than the equivalent cash-value award. Cash awards are more likely to be spent on monthly expenses, like credit card and utility bills, and are quickly forgotten. Being able to choose your award, like that Nespresso maker or state-of-the art drone you’ve had your eye on, is far more memorable.
Making the power of gratitude last
On their own, bare messages of thanks and delayed, once-a-year pay outs simply aren’t enough to make a lasting impact on employee engagement and performance.
But when employees are regularly recognised with tangible rewards, from peers and managers alike, the feeling of positivity towards and engagement with the company lasts far longer than just the initial moment.
When a company has an effective recognition and reward programme in place, employees experience gratitude and recognition for their contributions five times:
- When they receive the recognition
- When they’re congratulated publicly by colleagues
- When they choose what product or experience to select as their reward
- When they receive that reward
- Every time they use the item or reminisce about their experience
With more than two-thirds of the workers surveyed in the Human Workplace Index reporting that their company has had recruiting challenges, there’s never been a better time to commit to recognition and reward initiatives that ensure employees feel valued and appreciated, and in turn, deliver measurable business impact.
