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HR & culture

The wonderful ROI of recognition at work

By Silke
12 Jul 2022

Even in 1943, American psy­chol­o­gist Abraham Maslow had identified that appre­ci­a­tion and recog­ni­tion are basic human needs. And yet in 2023 there’s still plenty of room for improve­ment in the workplace.

Granted, recog­nis­ing and appre­ci­at­ing your employees costs money. But losing talent will cost you a whole lot more. Wondering what the return on investment for appre­ci­a­tion & recog­ni­tion is exactly? This blog post provides some insight.

Organisations that invest heavily in recognition experience 31% less employee turnover.”

The personal impact

In this article, employee recog­ni­tion firm O.C. Tanner takes a closer look at which parts of the brain are affected by recog­ni­tion. These are the hypo­thal­a­mus, which controls the basic functions of the body (eating and drinking, for example), and dopamine, the reward neu­ro­trans­mit­ter. Dr Alex Korb writes: Gratitude can have such a powerful impact on your life because it engages your brain in a virtuous cycle.’

Appre­ci­a­tion and recog­ni­tion primarily have an impact on well-being and health. For example, better sleeping habits, an increased metabolism, lower stress levels and a better work-life balance. This has a direct impact on work results and the inter­ac­tion between employees.

Appre­ci­a­tion also ensures more social and prosocial inter­ac­tion. Prosocial means promoting the well-being of others, usually through altruistic acts. By inte­grat­ing recog­ni­tion and appre­ci­a­tion into your company culture, employees are imme­di­ate­ly more willing to share their positive feelings with others. They help with projects and are more likely to take the time to notice who went the extra mile.

However, the biggest psy­cho­log­i­cal effect is the happiness and other positive emotions that we instantly feel both when giving and receiving appre­ci­a­tion. It’s about happy memories, better self-esteem and generally feeling more relaxed and optimistic. All those emotions create a we’re in this together’ mentality. This in turn cultivates a continuous cycle of appre­ci­a­tion and recog­ni­tion.

Appreciation as a business dynamic

Within an organ­i­sa­tion, appre­ci­a­tion and recog­ni­tion contribute to:

  • Work happiness
  • Engagement 
  • Motivation
  • Retention

You create a unique corporate culture and strengthen rela­tion­ships with and between your employees.Business think tank Gallup revealed that 50% of the employees they surveyed quit their jobs because they felt under­ap­pre­ci­at­ed. This effect is even stronger among the younger generation of employees. 65% say they look for another job when they feel under­ap­pre­ci­at­ed.

According to Deloitte, organ­i­sa­tions with a recog­ni­tion programme have 31% less voluntary turnover than organ­i­sa­tions without.

Organ­i­sa­tions with recog­ni­tion programmes experience 28.6% less frus­tra­tion than organ­i­sa­tions without, according to the SHRM Globoforce Employee Recog­ni­tion Survey. These companies are 12 times more likely to have strong business results, according to Deloitte.

When companies spend 1% or more of their payroll on recog­ni­tion and appre­ci­a­tion, 85% of them see a positive impact on engagement, the SHRM Globoforce Employee Recog­ni­tion Survey found.

More info on appreciation & recognition?

In 2023, happiness at work has become an important topic in many organ­i­sa­tions. Terms like sat­is­fac­tion, meaningful work and engagement are everywhere. And appre­ci­a­tion plays an invaluable role in this​.So it’s critical to make sure that you, as a manager, are speaking the same language as your employees. You can read more about the five languages of appre­ci­a­tion at work here.

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