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The Amazing ROI of Rewards and Recognition In Your Organization

5 min read
Last Updated on 28 January, 2021
The Amazing ROI of Rewards and Recognition In Your Organization

“When people are financially invested, they want a return. When people are emotionally invested, they want to contribute.”
-Simon Sinek

If employee engagement is a boat then rewards and recognition is the well-oiled engine required to steer it to its destination.

It isn’t rocket science. It’s Management 101. Treat your employees well and they’ll return the favor by being more productive.

According to a survey, almost 78 percent of employees would work harder if they were better recognized.

It’s a war over talents out there. To attract the top performers, it’s almost an essential need to have a rewards and recognition program in place.

Yet, it is always a good practice to understand the ROI behind something before actually investing in it. As companies seek to justify and implement rewards and recognition, they must connect that investment to noticeable business benefits.

Here is how a reward and recognition program will work to reflect the desired results in your organizations.

1. Increased Employee Engagement

Great companies know that the more the amount of gratitude in it, the greater the level of employee engagement.

An astounding 84 percent of HR leaders in organizations with a current employee recognition program reported that it helps with employee engagement.

Additionally, a recent study by Lighthouse Research revealed that high-performing companies (i.e. those with higher profits, employee retention, and engagement scores) were 14 percent more likely to focus on employee strengths. 37 percent more likely to use recognition as a tool to encourage and reward great performance.

Employee rewards and recognition programs can be a key component for creating a motivating workplace culture. Employees thrive on positive reinforcement, and such programs put an additional spotlight on the effort people put into their jobs.

2. Reduced Turnover Rates

Now, more than ever, employees are likely to stay at a company where great work is frequently appreciated.

A combined report from Globoforce and SHRM revealed that 68% of employers who run a value-based employee recognition program saw an improvement in employee retention.

In yet another study, organizations with recognition programs have reported an almost 31% lower voluntary turnover rate.

Employee turnover is an expensive setback that organizations face after spending close to hundreds of dollars in recruiting and training. Moreover, a higher turnover rate results in decreased morale, insecurity as well as reduced productivity.

A rewards and recognition program is a well-founded solution to battle the dwindling motivation and ultimately increase the level of employee retention in your organization.

The ROI of employee turnover is pretty easily seen when you compare the number of employees leaving before and after implementations of an R&R program.

3. Better Business Results

It’s important to treat employee recognition as not just a program, but a management practice that has a very real business impact. Social recognition has a proven ROI, and it only takes an investment of 1% of payroll to see the results.

According to an SHRM study, a majority of human resource professionals state that their employee recognition program positively impacts:

  • organizational culture (85%)
  • employee engagement (84%)
  • employee experience (89%)
  • employee relationships (86%)
  • organizational values (83%)

The same study states that a recognition and rewards program is more than 2X as likely to drive better business goals.

Frequently appreciated employees are more keen on giving better performances. Additionally, they start taking a personal interest in the organizational goals and business success, as well.

When a business invests in its employees, it is infact investing in a better customer base. Well appreciated employees not only work harder but also turn into your company’s very own personal advocates.

The foremost business goal of any company is to increase profits. Profits come in when you have a dedicated customer base. Many studies have demonstrated that treating your employees well is a necessary step in providing a better customer experience.

See the connection here?

The positive ROI of rewards and recognition is undeniable on whether it can contribute to actual business success.

4. Innovation and Productivity

With a base salary, employees will just work at a level that’s expected from the job. If companies want their employees to go above and beyond, employers may consider offering their employees the opportunity to earn additional perks and frequent recognition.

Companies have attributed employee recognition to improving sales, customer service, patient satisfaction, and even quality metrics.

Recognition is more effective than a salary bonus at encouraging people to be more innovative and productive.

According to an O.C Tanner study, employees who receive strong recognition are 33% more likely to be proactively innovating. All this while generating almost 2x as many ideas per month compared to those who aren’t recognized enough.

Additionally, according to Globoforce, 78 percent of employees would work harder if they were better recognized.

When employees receive strong recognition employees are left with being more confident, self-assured and better performing. On a fundamental level, appreciation makes a person go the extra mile for the organization they work for.

Modern employees just don’t need higher salaries to be more productive. The simpler alternative is in providing meaningful recognition for a job well done, innovative company culture and encouraging leaders.

5. Ultimate Brand Value

Almost 66 percent of companies with values-based recognition said it helped them build a stronger employer brand vs. only 28 percent of those with non-values-based recognition.

A brand’s worth is the perception of the company by the people about an organization.

The organizations where the employees come first are the ones that have an actual impact on the outside world.

It is easier for people outside your organization to see if employees are engaged or not. When employees are happy, motivated and stress-free, it helps to portray that the company itself might be doing something positive.

A strategically implemented rewards and recognition program can accelerate the business growth and help a company in achieving its strategic goals, thus improving the brand value.

Wrapping It Up

The positive ROI of employee recognition and rewards is evident from the improved employee engagement levels, reduced turnover rates, increases productivity and positively impact employee morale.

However, no workforce is created as equals. What worked for some other company, might not work for you. The bottom line is that positive ROI can only be seen when you choose the right rewards and recognition platform.

Once you identify the right recognition and rewards platform, it becomes way easier to make employee recognition a part of your ongoing company culture.

This article is written by Barasha Medhi who is a part of the marketing team at Vantage Circle. Barasha can be found either searching for interesting HR buzzwords to write about or looking at pictures of cozy Bel Air mansions. For any related queries, contact