If you are an employer undecided about whether an employee rewards and recognition programme will truly contribute to the success of your business, we are here to help you decide. In particular, what is the connection between employee rewards and recognition and employee loyalty?
Whilst many will argue that rewarding and recognising your employees can lead to improved employee retention rates, does this statement actually hold true?
We will explore this very question in this article, discussing the definition, examples, and purpose of employee rewards and recognition before moving on to delve deeper into whether they create employee loyalty in the workplace.
Let us dive right in!
What Are Employee Rewards & Recognition?
Firstly, let us define what employee rewards and recognition are. In simple terms, employee rewards and recognition refer to a system in which employees’ performance and hard work are acknowledged and appreciated. This could be in the form of intrinsic or extrinsic rewards and recognition such as (but not limited to):
- Bonuses
- Paid time off
- Discounts/vouchers
- Free meals/snacks/drinks
- Opportunities for professional development – training courses etc.
- Volunteering opportunities
- Private healthcare including dental and vision care
- Flexible working hours
- Wellbeing programmes – cycle to work schemes, fitness or meditation classes, 10,000 steps a day challenges etc.
- ‘Employee of the month’ wall
- Newsletter shoutouts
As you can see, the list of the different types of employee rewards and recognitions that could be implemented into a workplace is vast. However, when it comes to launching an effective employee rewards and recognition programme, particularly its effect in creating employee loyalty, this is reliant on how valuable the programme is to the employees.
Will employees truly benefit from this type of reward and recognition system? Or is it just a system that aims to boost employee loyalty and motivation, but fails to deliver?
As a result, it is important for employers to consider what rewards and recognition methods should be used in order for employees to successfully reap the advantages of the programme.
Employee Loyalty & Employee Retention
So, what is employee loyalty anyway?
Firstly, employee loyalty can be defined as the extent to which employees are engaged and committed to their company. You may find that loyal employees are less likely to:
- Search for another job
- Speak negatively about their company and manager/employer
- Quit or leave the company
Instead, loyal employees tend to:
- Invest in company’s success – work harder due to increased motivation and morale
- Be more enthusiastic about their company or role
- Feel included within the company, having a sense of belonging and feelings of bonding
- Volunteer to do tasks
- Remain with the company for an extended period of time
With the above in mind, having loyal employees in your company does appear to have benefits of its own. Not only can it reduce employee turnover, but employee loyalty can improve the general operations of the business, especially when it comes to productivity. As a result, having loyal employees within your company can lead to:
- Improved customer service and customer experience – loyal employees whose values align with the company’s are able to pass these values to customers whenever they interact with them; has potential to increase customer loyalty
- Better company image – loyal employees are happy and satisfied employees, and this sentiment is likely to be shared towards their families and friends, improving the image of the company as a whole
- Attract new employees – employees who are loyal to the company are more likely to spread good word about the company, encouraging others to apply and work for the company; this can help with sourcing new talent quicker
- Boost productivity and production – loyal employees are motivated and better engaged with the company and their work, meaning that tasks can be finished faster, meeting and exceeding goals
Boosting Employee Loyalty With Employee Rewards & Recognition
Now that you understand the importance of employee loyalty, how do employee rewards and recognition come into play?
As mentioned previously, a successful employee rewards and recognition programme can lead to not only an improvement in employee performance and morale, but also drives overall company success, particularly in terms of boosting employee loyalty.
This is proven in a wide range of studies and reports, including an Achievers 2018 survey that discovered that 69% of employees stated that they would remain in their current company as a result of rewards and recognition. This statistic shows employee rewards and recognition has the potential to minimise employee turnover, cultivating employee loyalty within the workplace.
If you are an employer struggling with increasing employee turnover rates, then it might be time to start looking at your rewards and recognition programme in order to identify improvements that can be made to secure your employees’ loyalty to your company.
Using the insights gathered from feedback surveys, for example, you are then able to implement any recommendations that were made to show that you actively listen and care about your employees’ opinions and wellbeing, boosting their loyalty to the company.
Fostering A Culture Of Recognition
Although employee rewards themselves are easy enough to give as an employer, regular recognition of employees can sometimes be overlooked. Encouraging your department heads or managers to acknowledge employees’ hard work is simple, but did you know that peer-to-peer recognition is 35.7% more likely to positively impact employee performance compared to manager-only recognition?
This means that there is also value in fostering a workplace environment where recognition is not only given by team leaders, but also by employees to other employees themselves. In turn, workplace morale can be increased, improving employee performance and their engagement with the company.
A company culture that is collaborative, encouraging, and recognises achievements and successes of employees is more likely to lead to loyal employees who will remain within your company for years to come.
The Bottom Line
It appears that employee rewards and recognition do help create employee loyalty – and this is through their capability to increase employee engagement. Engaged, motivated, and happy employees are more likely to become loyal employees, so employers should begin prioritising producing a rewards and recognition programme that serves their employees well. Leveraging employee rewards and recognition can help maximise business success in the long run.
