How To Improve Employee Retention Through Recognition

Improving employee retention is a constant concern of leaders and Human Resource professionals.

One of the tools available to leaders to change turnover issues is employee recognition.

Let’s examine how employee recognition can be a gamechanger in turning around your retention issues.

Turnover Case Scenario

The turnover rate used in organizations is a measurement of how many employees leave jobs in an organization and are replaced by new hires.

For example, the turnover level for clinical employees at ABC healthcare system last year was shown to be 10 percent. This equates to 2,000 clinical employees leaving the organization.

How much would this cost ABC Healthcare system?

The average annual salary for each clinical employee leaving ABC Healthcare system is calculated at $70,000. According to one research study, turnover costs are conservatively estimated to be at least 20 percent of salary1 to replace a clinical employee. That means it costs as least $14,000 to recruit, orient, and train each new hire to replace the leaving employee.

You do the math. If you lost 2,000 clinical employees last year it means it would cost your organization around $28,000,000 to find, orient, and train new employees. That is a lot of money.

Recognition Impact on Turnover

Can recognition really make a difference?

Our research in organizations using estimation analysis, shows managers and employees typically estimate that using recognition practices can generate an average of 55 percent impact on turnover.

Meanwhile Recognition Programs were estimated to have at least 15 percent impact on employee turnover.

As you can see from this research, recognition practices can have at least a three times greater impact on employee turnover than recognition programs do. However, combined, recognition practices and recognition programs could have a potential impact of 35 percent on employee turnover.

Together, Recognition Practices and Recognition Programs could have a potential 35 percent average impact on employee turnover.

How Much Money Could Recognition Save?

What would happen if you expected and taught people to give more effective and meaningful recognition to your clinical staff? How much money could you possible save this healthcare organization?

Continuing the math calculations.

  1. We know that implementing effective recognition practices and good usage of your recognition programs can impact employee turnover levels by 35 percent.
  2. We know last year’s turnover rate for clinical staff was at 10 percent.
  3. Assuming a 35 percent impact of recognition on turnover, the rate of turnover would be reduced to 6.5 percent.
  4. This would reduce actual turnover costs to an amount of $18,200,000.
  5. This means a savings of almost $10 million.

Other research conducted2 has indicated that a 10 percent increase in recognition generates a 3 percent improvement in retention.

Look at All Recognition Opportunities

Looking at the hospitality industry where programs may not be accessible by all staff may necessitate some creativity with recognition practices. Consider ideas like the following:

  • Holding pre-shift meetings and sharing a story of exceptional service observed and reported.
  • Highlighting a customer service or organizational value that someone demonstrated.
  • Give an on-the-spot reward card to an employee going above and beyond their regular job duties.
  • Visiting the different work groups behind the scenes and stopping them in their work and thanking them for making our customers rooms the best in the industry.

Consider what would work for your workplace situation and showing that all staff in front of customers and behind the scenes feel valued and appreciated.

Recognition Reflection:  Have you shown how recognition practices and programs improve retention in your organization?

  1. O’Brien-Pallas, L., G. Tomblin Murphy and J. Shamian, 2008. Understanding the Costs and Outcomes of Nurses’ Turnover in Canadian Hospitals. Nursing Turnover Study FRN# 66350. Toronto: Nursing Health Services Research Unit, University of Toronto.
  2. Achor, Shawn. The Benefits of Peer-to-Peer Praise at Work, 2016. Harvard Business Review.

Roy is no longer writing new content for this site (he has retired!), but you can subscribe to Engage2Excel’s blog as Engage2Excel will be taking Roy’s place writing about similar topics on employee recognition and retention, leadership and strategy.

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