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2 Ways to Offer a More Nuanced Correlation Between Employee Recognition and Better Business Results

January 2, 2018
| ByMike Ryan

HR managers often discuss the benefits of employee recognition in the context of engagement and the business benefits that follow. They may mention that employee engagement has been shown to be a significant factor in improving a variety of workforce outcomes such as employee loyalty and retention.

Make no mistake; most senior executives see real value in sponsoring recognition programs. Forty six percent of them view these initiatives as an investment rather than an expense. Still, some need to be reminded of the specific manner in which employee recognition helps the business perform better. In other words, they want to know more about the connection between employee recognition investments and the business’s day-to-day performance. 

Are you ready to have that conversation? Here are 2 ways you can offer your senior management team a more nuanced correlation between employee recognition and better business results.  

1/ By outlining the connection between recognition, employee attitude and productivity. 

The amount of recognition an employee receives influences their attitude at their work. It shapes how they feel about their colleagues and it impacts how they treat customers.

How much does an employee’s attitude impact their contribution? Forty one percent of it is directly correlated to the amount of recognition they receive. In fact, one poll, found that 35% of all employees felt that a lack of recognition was the biggest emotional hindrance to giving a better effort.

The recognition an employee receives (from either their supervisors or their peers) is a proven morale booster. Employees will always rate praise from their managers as a top motivator. But what many executives don’t fully realize is that co-worker appreciation can have a bigger impact on an employee’s attitude.

Most companies are rightly focused on building cultures that outperform rivals. Peer recognition is one of the most important building blocks for doing just that. It can cement an organization’s resolve against a common cause; it can spark innovativeness as workers band together to develop more productive ways of achieving the company’s goals and it can create the type of mutuality that drives a collective focus on customers. Your executive team will appreciate (and relate to) those outcomes.

2/ By understanding the link between employee recognition and customer retention.

Companies are certainly focused on employee retention. Holding on to good workers has all types of business benefits. When they leave, they bring important institutional know how with them and in a tight labor market they are hard to replace. Executives know that. But just as employee turnover is a costly proposition, senior executives concern themselves more with the real-time revenue implications of losing customers.  

One of the most recognizable byproducts of engaged employees is the influence they have on customers. No matter what business you are in, this age old axiom is true: if employees feel appreciated and valued they will treat customers in the same manner.

Business leaders understand the cause and effect of keeping customers and the profits that follow. Increasing customer retention rates by just 5% can boost profits anywhere from 25% to 95% depending on the industry model in question. As someone responsible for employee engagement you will want to point this statistic out to your executive sponsors who instinctually equate customer retention with making their revenue goals. According to a recent report, organizations that have more than 50% employee engagement retain more than 80% of their customers. 

The relationship between employee recognition and customer longevity is not only indisputable; it applies across every business sector and it’s something that should be stressed during conversations with recognition sponsors.


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