Jessica Collins

Do you believe employee recognition is given out fairly and frequently at your company? How you answer depends a lot on your job title.

Research we conducted with SurveyMonkey in 2019 found that 89% of executive-level leaders believed recognition was doled out fairly at their companies, whereas only 62% of people in intermediate positions believed that to be true.

Fortunately, if you believe your organization could and should do a better job of recognizing people for their contributions, the data is on your side:

• Josh Bersin’s seminal 2012 research found that the companies that rank in the top 20% for building recognition-rich cultures see 31% lower voluntary turnover rates.
• In 2016, Gallup found that people who don’t feel adequately recognized are twice as likely to quit.
• In 2022, 63% of the American workers we talked to said they feel unappreciated by their employers on a daily basis.

The big question is: what kind of data will resonate with your executives and how can you get their attention? To make a strong case, you’ll need to address your leaders’ specific values, challenges, and goals, then demonstrate with data how an employee recognition program could materially help them align with their values, tackle their challenges, and reach their goals.

Get a head start! → Download and customize the slide deck from our webinar with HR.com, “Getting the buy-in you need to launch an effective recognition employee program”

Address your leadership team’s values, challenges, and goals

CEOs and executive leaders are always navigating uncertainty, regardless of whether there’s an economic recession on the horizon.

So while members of your leadership team no doubt understand that recognition is important in an abstract sense, their priorities are operational and financial. By appealing to your leaders’ bottom line concerns, you can connect your case for recognition to problems they’re currently trying to solve. Recognition might not be on their minds, but retention, morale, and productivity probably are!

Manage the top line, which is your strategy, your people, and your products, and the bottom line will follow. –Steve Jobs

The statistics and resources we share in the following sections connect employee recognition to the most common challenges that today’s executive leaders face.

(To take a deep dive into the benefits of recognition, check out the chapter “Why is Employee Recognition Important?” from our Guide to Modern Employee Recognition.)

Employee turnover and retention

Here’s a stat you’ll definitely want to save: Companies with recognition-rich cultures have 31% less voluntary turnover than companies who don’t. What’s more, employees who don’t feel recognized are twice as likely to quit within a year.

Employee turnover costs companies a lot more than the lost productivity of one person. Depending on your industry, the time and resources needed to replace an employee can cost anywhere from 16% to 213% of an employee’s annual salary.

Use our Cost of Turnover Calculator to generate real estimates for your business

From writing and posting job descriptions to interviewing candidates, paying referral bonuses, risking burnout by increasing other employees’ workloads, and training new hires, the amount of work it takes to backfill open roles can seriously hinder your company from achieving its revenue goals. And that’s all without accounting for the hidden costs of turnover, like the hit to team morale that comes after teams lose beloved colleagues.

In 2021, 88% of Bonusly admins reported that employee morale improved after they introduced Bonusly to their organizations and 48% of admins said that Bonusly improved retention. (Check out the 2021 Bonusly user survey results in full on our product blog.)

Employee engagement

The benefits of employee engagement include greater productivity, financial performance, customer experience, and employee retention. (Fascinating, right? It’s almost as if these things are all related. 😏)

Engaged employees are enthusiastic about their work and, in turn, they’re more productive, willing to work hard to achieve the company’s goals, and likely to stick around.

Recognition is so closely tied to employee engagement that when recognition increases, employee engagement follows suit. Our product data supports this: 93% of Bonusly admins saw improved employee engagement after they started using Bonusly! An effective employee recognition program can simultaneously boost employee engagement and help HR and managers identify underlying issues like siloed teams, low morale, and performance plateaus.

Get in touch with one of our employee recognition experts to request a customized cost of disengagement report for your company.

Company culture and company values

Remember that stat we shared earlier about how companies with recognition-rich cultures have 31% less voluntary turnover? A recognition-rich culture typically stems from a company’s core values, guiding beliefs that help employees understand what’s expected of them and how they should make decisions in order to be successful in their roles and at the company.

Employee recognition and rewards programs create a unique opportunity for leaders and managers to visibly and frequently promote your company’s values and highlight how individuals and teams are contributing to your company’s objectives. (This is especially true if your company values are incorporated into your performance management practices.)

With Bonusly, for example, you can add your core values as default hashtags to the product so that people can tag specific values in the recognition they give to their colleagues. When everyone in your organization can see tangible examples of how people embody your core values on a regular basis, that information can really enrich your culture.

"Company values matter because employees face tough decisions every day,” remarks Victoria Melcher, the manager of culture and engagement at BigCommerce. “The right way isn’t always the easy way, and you want employees to do what’s right for your organization every time. With Bonusly, we're able to reinforce those values and have employees champion what it means to be a part of BigCommerce.

“Among the recognition tools we explored, Bonusly became a top choice because it's globally scalable, which was especially important to our company leadership due to our rapid growth and distributed teams,” Victoria says. Read BigCommerce’s Bonusly story for more inspiration!

Answer frequently asked questions

In this section, you’ll find some of the most common questions that senior leadership will have regarding employee recognition. We’re old pros at answering these queries, so here’s the hard data and key insights you need to know:

Q: “Do employees really want praise rather than money?”

In a BambooHR study, nearly one-third of employees reported they would rather be recognized for their work accomplishments in a company-wide email from a company executive than receive a monetary bonus of $500 that isn’t openly publicized by a superior to their coworkers.

In Bonusly’s own research about how people prefer to be appreciated at work, 33% of respondents preferred to be appreciated primarily by receiving gifts. However, only 17% of respondents chose giving gifts as their preferred way to show appreciation.

Modern recognition programs that empower employees to choose the rewards that are personally meaningful to them leave the power of appreciation to come from thoughtful words emphasizing the intrinsic value of their performance.

This isn't specific to millennials, either. The more employees are recognized, the more satisfied they are with their jobs—even the difference between weekly and daily recognition increases the number of satisfied employees from 85% to 94%.

Of course, quality plays a big part in whether recognition is effective. Empty praise and meaningless trinkets can do more damage than nothing at all.

Values-based recognition programs are also more effective. Beyond acknowledging how employees exemplify corporate values and signaling to others how that looks, rewards like days off and donations reinforce employee value propositions (EVPs) that include work-life balance, community, and social responsibility.

Q: “Does employee recognition make a difference to the bottom line?”

For skeptical executives, return on investment must be proven for immediate and long-term benefit to the organization. We’ve split this section up into three sections, revenue, costs, and investment, to best address each concern.

1. Revenue

Organizations in the 99th percentile of employee engagement have four times the success rate as those in the first percentile.

Recognition satisfies the human needs of approval, esteem, and affiliation, which triggers the norm of reciprocity for people to give back to their supportive employers. “Employees who are engaged consistently show up to work and have a greater commitment to quality and safety” Gallup reports. For instance, traffic patrol officers make more DUI arrests and steel company staff make more creative suggestions for improving operations when perceived organizational support is high.

A 2017 study of nine organizations confirmed that increased recognition leads employees towards desired behaviors, including:

• Conscientiousness in performing job tasks
• Amelioration efforts to improve job tasks
• Collaboration to maximize group efficiency
• Personal initiative to improve group efficiency
• Involvement at the organizational level

2. Cost

Only three in ten employees feel they’ve received recognition in the past seven days. Increasing that ratio to six in ten employees could reduce absenteeism by 27%, reduce shrinkage by 10%, and raise work quality by 24%.

It bears repeating: turnover can cost you twice the salary of each employee who leaves. 😱 A recognition and rewards program could cost you significantly less than that.

3. Investment

HR usually administers recognition programs, while the budget can be department-specific, centralized, or both. Bersin by Deloitte reported spending was closer to 1% in 2012.

While there are more intensive options, these programs don’t have to be cumbersome. By making a positive upfront investment in employees, you can reassert your values and priorities.

Q: “Don’t we already recognize employees?”

Only 42% of employees are aware of their employer’s recognition program and additionally, only 24% of employees are satisfied with management’s recognition of job performance.

This may have something to do with the fact that years of service awards remain the most common kind of recognition program. Tenure-based recognition alone is unlikely to impact employee engagement or retention. If these programs don’t improve business performance, they can generate distrust in the value of recognition. 

Other unintentional barriers include: unclear criteria; limited capabilities to distribute rewards fairly; and, time-consuming forms and approvals process. Senior leaders assume their employees are recognized more than once annually, but 70% of employees report that they receive recognition once a year or not at all.

There's a lot of room for improvement.

It is not enough to implement any recognition program—programs should also align with the values and needs of the organization. Additionally, programs should help you provide effective employee recognition. By reallocating money you're already spending on turnover and ineffective recognition programs, you can build a budget for effective recognition.

Next steps

You'll be building your own recognition program in no time! Here are some key facts to take to your next C-suite meeting to really drive home that your company needs a recognition program:

• 76% of employees are unsatisfied with recognition of job performance
• Employees who feel valued are more present, productive, and innovative
• Employee recognition and reward program administration and costs are not as much as you may think. For the record, most Bonusly admins spend only two hours a month managing the program.

If you're considering a few employee recognition software options, use our handy evaluation scorecard to compare different vendors:

What's keeping you from implementing a recognition program? Our employee recognition experts have helped more than 3,000 people like you make the case to their leadership teams — get in touch, we’re here to help!

To solve employee turnover, we look at employee retention best practices and organization-specific strategies.

Current best practice is to improve the employee experience in order to increase employee engagement and retention—and all the other great things that come with them, like improved business performance.

The CMO of People maps the employee experience from the employee’s perspective instead of HR’s perspective. This small shift can help focus efforts on a great experience instead of an efficient process.

Even before someone is hired, they can begin to experience the passion of the leadership, the camaraderie of the workplace, and the inspiration of the organization’s purpose.

An employee value proposition (EVP) articulates what a person gains by working for you. Defining and communicating your EVP improves both recruitment and retention.

Gartner reports that organizations that effectively deliver on their EVP can decrease turnover by nearly 70%. They identify five key categories of a strong EVP:

• Rewards includes compensation, health benefits, and recognition awards
• Work includes person-job fit and work-life balance
• Opportunity includes career and development opportunities
• People includes coworkers, managers, and senior leaders
• Organization includes product quality and social responsibility

Starting day one, you will want your employees to experience the EVP throughout their time with your company. These are all opportunities to engage and retain your talent - or not.

That said, when it comes to turnover in your unique organization, a general best practice may not be the answer. The solution depends on the problem.

Your retention efforts will be more effective (and cost-effective) if they are tailored to the critical people at risk of leaving. Based on who these critical people are and the reasons they are at risk of leaving, consider the following strategies to reduce employee turnover.

How much could your organization save on employee turnover each year? Use our Cost of Turnover Calculator to find out. 

Total rewards

Compensation has less to do with retention than most people believe. However, it is a major factor in deciding between job offers.

If an employee is recruited by another company that offers higher pay, that could be a key reason they leave. The same goes for benefits and perks—vacation time may not be why employees stay, but it could be why some leave.

Therefore, regularly benchmark your total rewards against your competition for talent. Also, listen to employee feedback on what they value. That said, avoid competing on pay and giving employees every perk they ask for. It’s unsustainable, with diminishing returns.

What you can do is make sure that your employees are recognized for the hard work they do. Everybody prefers to be appreciated in a specific way, which is why we recommend checking out our study with SurveyMonkey about the five languages of appreciation. Rewards isn’t just about monetary amounts—it’s also about building trust, making others feel seen, and providing a positive employee experience.

Onboarding

Many people quit because the job wasn’t what they expected. Before hiring someone, ensure you are providing them realistic previews of the job and work environment.

Then, use your first impression wisely. Essentially, you want to affirm their decision to join the company. Make their first day special, make them feel welcome!

Next, set them up for success. People quit when they feel neglected, overwhelmed, under-qualified, or under-trained.

Be extra clear with new hires about the role and expectations. Ensure they have enough access to their supervisor when they have questions. No matter how brilliant they are, everyone has a learning curve in the beginning.

Finally, socialization into the culture is the biggest missed opportunity in onboarding. Incorporate culture into your onboarding program. Integrate formal and informal opportunities to build connections with co-workers. A buddy or mentor program is a common approach that gives the employee someone to go to with the less technical, more “how do you use the espresso machine?” kind of guidance.

For more tips on effective onboarding, check out our webinar: Employee Appreciation Starts with Onboarding.

Leadership

There’s no denying how important managers are. Supervisors play a key role in most retention drivers. That’s why enabling leaders to be their best is so important.

New managers need training, coaching, and support. They need the information and tools to lead their teams. For more details, read our summary of a strong leadership toolkit.

Apart from the role they play in retaining employees, it is critical to retain leaders! Don’t assume that just because they’re higher up in the career ladder, that they need less appreciation for their hard work. A good place to start is by recognizing your leaders.

Plus, don’t forget about your most senior leaders. PwC’s Strategy& reported turnover among CEOs at the world’s largest companies at 17.5% in 2018, a record high in 19 years. These senior leaders can leave huge information gaps in their wake if they leave, so don’t just assume they’re here to stay.

Most of the time a CEO leaves, it’s a planned succession. However, successor CEOs tend to deliver lower performance and shorter tenures. Which makes it all the more important to retain, engage, and prepare the people in your succession pipeline.

Learning and development

We love this quote from Peter Baeklund:

A CFO asks a CEO: "What happens if we invest in developing our people and then they leave us?"

The CEO responds: "What happens if we don’t and they stay?”

Development shouldn’t stop after an employee is trained to meet the expectations of the role. When you provide your people with the time, encouragement, and access to learning, then you are helping them to feel valued and that the company cares about their personal success. Bonus points if these employees are continually recognized for their ambition.

Based on the budget and function, this could be in the form of an online learning platform, conferences, job shadowing, mentorship, and peer-to-peer knowledge sharing.

Development should also be the focus of your performance management program. (By the way, we have a complete guide on that, too.)

Recognition

To provide the feedback that employees want, combine performance development with recognition. Josh Bersin reports that the top 20% of “recognition-rich” companies have 31% lower voluntary turnover rates.

When employees feel under appreciated, Robert Half found two thirds of employees would leave their jobs. Gallup found they were twice as likely to quit within a year.

Moral of the story: when you recognize and appreciate your employees, they’re more likely to stick around—and be more engaged, productive team members as well. Find information and benefits about effective recognition in The Guide to Modern Employee Recognition.

Growth and advancement

Growth encompasses the opportunity to contribute more, whether it’s a promotion or greater participation in decision making. Without changing jobs, employees can find growth through greater meaning in the work and greater contribution to the organizational purpose.

In a survey of over 2,000 professionals, over 90% would trade pay for meaning. On average, they would be willing to earn 23% less in their lifetime. They would even learn less just for a manager who cared about them having meaningful work.

When employees have meaning, they are more productive and take less time off. The study estimates this generates an additional $9,078 per worker for the company, every year. Furthermore, turnover risk reduces by 24% when shared purpose is combined with social support.

Any job has room for creativity and meaning. Focusing on the people that the employee helps. Create a shared purpose with the team. Consider job crafting, which allows employees to redesign or reframe their job.

In addition, look for ways to facilitate internal mobility. This could be as simple as ensuring employees are aware of job openings. This can be supported by encouraging one-on-one discussions with managers about developing skills for future jobs.

Wellness and work-life balance

Investing in wellness shows that the company cares about its people, which increases their satisfaction with the workplace. It also happens to improve the bottom line.

This is another area that depends on the needs of your unique employee population, paying close attention to those at most risk of attrition. Examples can be subsidized transit passes, free healthy snacks, or a wellness spending account.

The most important place to instill wellness is in the culture. On-site yoga classes won’t feel very genuine if employees fear they’ll look bad for leaving their desk to participate. Look in your day-to-day interactions and workflows for ways to support well-being.

Work-life balance is a priority and a challenge for pretty much everyone who works. Many are moving to more of a work-life integration or blend.

This had led to high demand for flexible work arrangements, which can save costs and increase productivity but can also introduce new challenges.

Figure out what makes sense for your organization and how to support it from the culture up. How about checking out Bonusly’s employee recognition and rewards platform? Join us for a demo to learn more about how you can start building a highly engaged organizational culture.

Otherwise, Chapter 5 of our Ultimate Guide to Employee Retention gives you a rundown of the best HR tech tools on the market.

Turnover is influenced by many factors that generally come from two directions: external forces and internal forces. We have a bigger impact focusing on internal forces within the company’s control.

We’ll start with external forces, though, because it helps to be aware of how much they contribute to fluctuations so that you can make effective decisions about retention. It also helps assess how important turnover is to your company when you see how you stack up against your competitors.

Average turnover rate

The U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey is based on a monthly survey of approximately 16,000 U.S. businesses. They report the average total turnover rate around 3.5% with voluntary turnover around 2% monthly.

As unemployment rates have declined over the past decade, the U.S. has gone from over six unemployed people per job opening in 2009 to less than one in 2019. That means employees have more options.

When there is more confidence in the economy and lower unemployment, voluntary turnover tends to rise and involuntary turnover tends to fall.

Mercer’s annual survey of 150 organizations in the US reported voluntary turnover at 16% in 2018 - lower than the 26.9% that the federal government reported, which may be a reflection on the types of organizations that participate in Mercer’s more in-depth study.

Overall, turnover does not vary greatly based on organizational size, although larger organizations can have slightly lower rates. And smaller organizations tend to feel more of an impact when someone quits.

Geographically speaking, the South tends to have the highest quit rates while the Northeast has the lowest in the US.

The biggest variances by far, though, are seen between industries. Hospitality and retail have the highest turnover rates while manufacturing and finance have among the lowest in the private sector.

Industry5-Year Average
Voluntary TurnoverHospitality51%Retail35%Professional Services34%Leisure34%Construction24%Transportation21%Real Estate21%Healthcare21%Information18%Manufacturing15%Education15%Finance14%Government9%

Source: U.S. Bureau of Labor Statistics, 2014-2018

When LinkedIn analyzed their half-a-billion users, they found 11% indicated they left a company in 2017. This turnover rate is likely lower than the government and Mercer reports because of the types of professionals that use the platform and the dependence on an individual updating their profile.

Still, LinkedIn showed how turnover reflects current industry trends. Retail is a high turnover industry and now software is too. However, tech employees usually move to another tech company while retail employees often move to a new industry, likely due to the rise of online shopping.

When LinkedIn ranked job functions, those with the highest turnover (17%) were marketing and research, followed by media and communication, HR, and support functions (15%). Sales, engineering, and operations also have above average turnover (13%), likely a reflection of high demand for their skills. Meanwhile business development has the highest retention (6%).

While turnover trends are valuable, insights into your industry and overall economy are likely enough to anticipate when you need to invest more in recruitment and retention. Besides, long-term investment in retention is the most effective approach regardless of fluctuations in the market.

And while it can be helpful to benchmark externally based on industry, function, and region, the most important benchmark is internally based on department, job level, location, and other segments of your organization over time. So let’s now look inward.

How much could your organization save on employee turnover each year? Use our Cost of Turnover Calculator to find out. 

Key drivers

Certain aspects of employee experience tend to be the biggest drivers of turnover (why employees leave) and retention (why employees stay).

Work Institute reports that 77% of voluntary turnover is avoidable. They found the top reason for leaving is career development, followed by work-life balance and manager behavior. Compensation, job, and workplace were also common reasons.

Based on industry research, the key drivers are consistent:

• Total rewards
• Onboarding
• Leadership
• Learning and development
• Growth and advancement
• Wellness and work-life balance

Total rewards

Total rewards goes beyond base pay, bonuses, and compensation overall. It includes health benefits like insurance and financial benefits like retirement savings. For many companies, it also includes any gifts or bonuses received due to a recognition program.

In sum, total rewards encompasses all that an employer offers an employee in exchange for joining, contributing, and staying with the company.

Recognition

When we talk about total rewards, we should also keep in mind the power of recognition. At its core, employee recognition is the open acknowledgment and expressed appreciation for employees’ contributions to their organization.

When organizations decentralize employee recognition and empower their workers to engage in peer-to-peer and 360-degree recognition (that is, not solely top-down recognition), they increase the frequency with which employees can receive recognition and get a more nuanced understanding of what individuals, teams, and departments consider valuable.

Onboarding

Employees tend to be the most positive about their employer before their first day on the job. Onboarding is a way to build on that momentum, but it’s often a place where companies fall short.

A BambooHR survey found that 31% of employees have quit a job within the first six months and the top reason was a poor onboarding experience, which is generally defined as the first 90 days on the job.

Onboarding includes orientation to the workplace and the job, yet it’s so much more than that. This is the time to integrate the new employee into the team and culture: the core values underlying everyday behavior.

Leadership

We know from our own experiences—and research backs it up—how critical managers are to the employee experience. The immediate supervisor directly influences many key drivers of engagement and retention like development and recognition. If your manager doesn’t recognize your work, how can you trust them to support your career growth and success? 🤔

Senior leadership also plays an important role. Executivesmustclearly articulate the company’s vision and values. They’re responsible for the transparency that makes people feel secure and that the work they do is meaningful.

Learning and development

When people think about job learning, they think training, and that’s certainly a key part, whether in-class workshops or bite-sized videos on-demand.

However, the majority of career development comes from on-the-job learning. It’s an organic way we share knowledge. Plus it’s often the most effective way to learn: in a real environment with a real task.

Employees want to strengthen their skill sets to do better in their job, career, and sometimes just for the challenge and stimulation that keeps coming to work every day interesting.

Growth and advancement

While learning and growth are highly related, we separated them because they can satisfy different needs and can be accomplished in different ways.

Nobody wants to feel stuck. No matter how much education you provide, many people are not satisfied unless they can move to progressively more challenging jobs. And simply changing someone’s title from junior to senior hardly makes them feel more confident and capable.

Wellness and work-life balance

We define wellness as a holistic way to look at employee health, that includes both physical and mental health.

Work-life balance is a way to support employee wellness, and an increasingly more common method is flexible work arrangements. Research from Owl Labs and TINYpulse showed companies that support remote work have 25% less turnover.

Now that you know the factors that cause turnover, what can you do to fix it? Keep reading to find out.

Want a head start? Check out Bonusly’s employee recognition and rewards platform for a turnkey employee engagement booster by requesting a demo.

When we talk about employee turnover, we mean the number of employees who leave an organization over a specified timeframe, typically one year. On the other hand, employee retention is number of employees an organization keeps during a given period.

Many companies track turnover closely because it can be a huge cost to replace employees. Like customer retention, investment in employee retention has a higher return than investment in acquisition.

Retention is also a key sign of employee sentiment and engagement—it can even be a competitive advantage! After all, when a company is hemorrhaging employees, that’s typically a sign of something wrong. Compare this to a company with a team with a proven history of skills, knowledge, and relationships built long term within the company.

Which company would you rather work for or invest in?

That’s what we thought, too. 😉

But before we dive deeper into the who, where, and when of turnover and retention, let’s clear up some definitions.

Glossary of terms

Retention is the percentage of employees who stay at an organization over a set period. It can also be measured in terms of the average or median tenure; the number of years that employees remain with an employer.

Turnover is the percentage of employees who leave an organization over a set period. It is often reported monthly and annually.

💡 You may also hear terms like attrition, churn, or separations for turnover. Attrition can sometimes be used to refer to voluntary turnover, often in the context of a hiring freeze where employees leaving through natural attrition are not replaced in order to reduce the size of the workforce.

Voluntary turnover is when the employee decides to end the employment relationship—it’s the employee’s choice to leave. Generally, the primary focus of retention efforts is to reduce these resignations.

Retirement is technically voluntary turnover, however companies often report retirement rates separately because they are not a focus for reducing turnover.

💡 You may also hear terms like quits, exits, departures, or leaves for voluntary turnover.

Involuntary turnover is when the employer decides to end the employment relationship—the employee did not choose to leave. This could be for reasons of poor performance or a layoff due to redundancies.

💡 You may also hear terms like terminations or discharges for involuntary turnover.

More recently, employers are paying more attention to the following quality-of-attrition metrics, which report the attrition rates of “high quality” employees.

Healthy turnover is when ending the employment relationship is best for both the employee and employer. It could be when a project ends or there is just a poor fit.

In fact, helping employees understand their own strengths, needs, and preferences—in addition to clear expectations and accountability—can help them voluntarily leave when they’re not able to perform optimally or if they’re unhappy. An employee consistently performing at a low quality or having a toxic attitude impacts the whole team, and letting them go might be best for the long-term health of your company.

💡 You may also hear terms like non-regrettable or functional turnover.

Regrettable turnover is when an employer loses an employee important to its business.

This generally includes employees identified as high performers or high potentials. It also relates to how big an impact they make when they leave, typically because they had a lot of intellectual capital, many direct reports who relied on them, or critical skills that will be difficult to replace.

💡 You may also hear terms like unhealthy or dysfunctional turnover.

Avoidable turnover is when the reasons an employee left were within an employer’s control or influence.

An unavoidable departure may be an employee moving with their spouse, whereas an avoidable departure could be an employee taking a similar job at another company because they offer more flexibility in schedule.

While all types of turnover have some cost to the company, the critical focus for retention strategies is to reduce avoidable and regrettable turnover to as close to zero as possible.

FAQ

Who is responsible for turnover?

Managers tend to have the biggest impact on retention and face the most immediate consequences when someone leaves their team.

That said, it is often the senior leadership team or HR who is responsible for tracking and reporting turnover. These groups may also work together on wider efforts to reduce turnover.

And overall, every member of an organization can influence and benefit from retaining the people needed to fulfill the organization’s purpose.

Where do I find my company’s turnover and associate cost?

First, you need company data on headcount and the number of people who left the company in a given time period. The general formula is:

Employee turnover rate as a percentage = (total number of employees who left in time period / average number of employees in time period) * 100.

If you don’t have access or can’t request this information, then you may need to partner with those who can report and influence this area. For example, you may be a manager speaking to an executive about the value of sharing the company’s turnover and developing a strategy around it.

As a manager, it can be valuable enough to pay attention to the turnover in your own team, where you have more information and influence. You will also have more insight into which turnover has been voluntary, regrettable, and avoidable.

If you have access to an HR information system (HRIS) or human capital management (HCM) software, then you may find categories like voluntary and involuntary turnover are already being tracked.

Or, you may spot an opportunity to leverage technology (and Excel spreadsheets count as technology here, too!) to better track the types of turnover for better insights and decisions.

To find out how much turnover costs your organization each year, try our Cost of Employee Turnover Calculator.

When should we pay attention to retention?

Retention may not always be the organization’s priority if your best people never leave for unavoidable reasons. Even if this is the case for you, though, retention is a competitive advantage that you will want to monitor and nurture.

From the very first employee-employer interaction, likely the job application, you have an opportunity to build a culture of commitment. Every aspect of the candidate and employee experience can help you keep the people who make your organization successful.

Why should I care about retention?

You’re in luck—our next chapter exclusively covers this question. Read on to find out!

Plus, if you’re looking for a quick way to start improving employee engagement, we invite you to take a tour of the platform and join us for a demo.

Want to learn more about employee retention? Read our Ultimate Employee Retention Guide:

High turnover is a major concern for many organizations. In 2018, over 40 million people quit their jobs in the US compared to just 30 million in 2014.

But how do you know if your turnover really is an issue? And if it is, how do you focus your efforts to improve? Let’s take an analytical approach to retention.

• Identify the symptoms
• Diagnose the disease
• Assess the prognosis
• Prescribe the treatment
• Plan check-ups

Identify the symptoms

Turnover is a key HR metric and tends to be understood by leadership as a serious risk. If you are looking to leverage people analytics, employee retention is a great place to start.

Key areas of focus

A high turnover rate is likely to catch your eye, but what else should you be paying attention to?

The most important symptom to watch for is an unexplained change in internal historical trends or an unexpected difference relative to the rest of the organization. A number on its own tells us little out of context.

To better understand turnover, dig deeper into why people left and how much control the organization had to prevent it. Exit surveys and interviews are now a standard part of HR practice and remain an important source of insight.

Also look at which segments see different retention rates, such as department, role, manager, and/or location. And within the historical trends, look at times of the year or month at most risk. For example, companies often see a turnover spike in January.

Pre-turnover red flags

Turnover may soon become a problem when you see decreases in:

• Employee engagement, which can be measured in surveys
• Volunteerism in workplace projects or activities
• Completions of employee development plans

Surprisingly, a red flag can be fewer complaints. Less feedback on how things could go better might be the quiet before the storm, meaning employees have given up trying to improve the situation in the workplace and are now looking elsewhere.

Some organizations do "stay interviews" in addition to exit interviews, meaning asking the questions we only think of when employees leave, in order to prevent unhealthy turnover.

"Typically it's not until the exit interview that you're given perspective on what went wrong, and by then it's too late to change the person's mind." Mandy Gilbert, Founder and CEO, Creative Niche

Diagnose the disease

Once you have an accurate pulse on your retention, analyze the data to understand the bigger picture and underlying causes.

Data sources and relationships

Combining retention data with other relevant metrics may uncover reasons behind turnover issues and give clues as to how to address it.

Key sources of data include:

• Basic employment data (e.g. tenure, manager, training completed)
• People data (e.g. employee experience, engagement, recognition)
• Business data (e.g. sales performance, error rates, operational efficiency)
• External data (e.g. company review sites, government statistics, consulting firm studies)

Simple analysis and insights

The goal of collecting and analyzing this data is to diagnose root causes. Solutions will depend on the problems identified.

Before you consider investing in new technology, take a look at the software you already use. There may be analytics capabilities to leverage in your HRIS. Lightweight tools like Excel are often enough to track metrics and chart trends. They often include capabilities like conditional formatting or a correlation matrix of variables to highlight trends. Platforms like Bonusly can provide insights on engagement trends and connections within teams.

Of course, data analysis should be informed by human insights into what is going on inside and outside the organization. Quantitative data is also best used together with qualitative data.

Surveys and focus groups help you ask the right questions to understand issues and their underlying causes at a deeper level. Survey design and focus group facilitators are key to using these methods effectively, showing employees that you care about what they have to say and that you are invested in providing them a positive work environment.

More advanced analytics

In the same way analytics can identify elements that drive success in a role, retention risk analysis can analyze the profiles of employees who quit to identify current employees with similar profiles.

For more on the subject, The Data Driven Leader walks through the steps of applying people analytics to a detailed example of strategic recruitment and employee retention. An important reminder, whenever working with employee data, is to respect privacy and consider the ethics of analyzing information in a new way.

Some companies are experimenting with aggregate analysis of communications. One firm applied artificial intelligence to emails over five years and found that “employees who veered away from the culture in their messages were more likely to quit."

Organizational network analysis identifies the flow of information within your organization, including informal paths. In Bonusly, for example, the Organization Graph helps to visualize and understand connections between your people and teams. It can identify connectors, those who play an essential informal role in bringing people and information together.

There are exciting analytics tools designed specifically for HR, like Visier. This technology helps target and tailor retention efforts based on root causes and business impact. For example, Children’s Health found that certain hospitals had a higher than average first-year turnover rate that they were able to reduce with a small increase in hourly wages.

That said, algorithms are not necessary to enhance your retention strategy or make your people practices more data-driven. Just asking strategic questions with the data you have is a great start.

Assess the prognosis

With an understanding of your current retention state, the next step is to decide if you should continue on your current path or make a change.

Is turnover a problem?

Traditionally, organizations separate turnover into categories based on the reasons people left.

Most companies distinguish between voluntary and involuntary separations, and often will separate out retirements because employers tend to have less control over whether employees retire than whether they leave for another employer. Spikes in voluntary turnover tend to signal a problem.

Newer quality-of-attrition metrics to consider are “unhealthy” or “regrettable turnover.” Turnover is regrettable or unhealthy when it means losing people important to your business. In addition to identifying why people left, this is about who left.

It may be healthy turnover if there is no longer a skills match or it is just the nature of seasonal or project work.

Healthy turnover may also be the case where an employee without room to grow in the organization leaves before they become frustrated. In some situations, low turnover is a red flag that low performers or toxic employees stay with the company for reasons like job security or salary.

“When you lose your top talent, people who you’ve sincerely invested in, in the hope that they have long-term future with you, that’s a concern.” Alison Sibree, VP of HR, APAC and Japan, Oracle

Regrettable turnover is defined by how big an issue it is when that person leaves. If the employee had been identified as high potential, the loss is likely more regrettable. If the employee was offered a separation package, it may have still been costly to replace them, but the departure is less regrettable and likely better for the organization in the long term.

Other ways to identify if a resignation was regrettable is if the departing employee had a high number of reports, critical skills, or intellectual capital. Past performance evaluations and metrics can be considered as well. The bigger the impact of them leaving, the bigger the need to address and prevent losing them.

Retention benchmarks

The amount you invest in retention depends largely on turnover costs and internal trends. However, looking outside the organization puts your retention in context.

Examples of benchmark sources include:

• The US Department of Labor’s quit rates by industry and region
• Mercer's survey, that found an average voluntary turnover rate of 16% in the US in 2018
• LinkedIn’s study based on half-a-billion members providing an end date for their position at a company

Consider region, economy, employment rate, labor market, industry, and types of roles that generally have higher turnover. For example, hospitality is known for high turnover rates.

Value of retention

The other question is whether turnover is costing you more than it should.

Most of a company's investment in its people is in recruitment and rewards, but ROI depends on retaining the people you recruit and giving them the training and tools to contribute more value to the company than the company spends on compensation overall.

Source: Employee Retention Now a Big Issue: Why the Tide has Turned

Try out Bonusly’s cost of turnover calculator to estimate how much turnover is costing your own organization.

Want to learn more about employee retention strategies? Click here to download 11 Strategies for Building an Outstanding Employee Retention Program and send it to your coworkers!

Prescribe the treatment

Once you have identified the problem, the most important step is implementing a treatment plan.

Problem solving approach

To see impact quickly and maintain agility long-term, it is important to continuously ask questions and adapt based on the answers.

Design thinking is a framework to consider when approaching a problem to solve. It starts with the end user’s needs in mind and uses evidence and experimentation to determine the most effective and feasible solution.

If you are concerned you do not yet have the data or analytics capabilities, don’t worry. You can begin by addressing the common reasons that people leave, and then adjust your focus based on new and unique information on your people.

Take, for example, a top reason that people cite for leaving: opportunity for growth. Generally, it is worthwhile to invest in this area. However, it is possible you could find–based on surveys, focus groups, and data like internal job applications–your employee population may be happy with opportunities for advancement, yet they are leaving because of culture.

If the data or direct conversations indicate specific groups are at high risk of leaving, engage them in the problem solving. This could be in the form of a targeted focus group about why people stay, why people leave, and how to retain the best talent for collective success.

Retention strategies

Strategies to increase retention depend on the root causes.

For example, new hires tends to be a group with lower retention rates. As a result, you can review your current onboarding practices against what evidence tells us about effective practices. One key ingredient in retaining those new hires is to recognize their actions, helping them feel included and engaged. For strategies and examples related to onboarding, check out this webinar recording.

You may have already identified specific individuals as presenting more risk of leaving. Sometimes the intervention is therefore individual, meeting one-on-one to discuss what would keep them engaged and committed to staying with your organization.

Appreciation and recognition are important factors in retaining top talent. Organizations that score highest for building a "recognition-rich culture" have 31% lower turnover rates than their peers. Following recognition best practices also helps to boost morale and productivity.

Want to learn more? Bonusly has outlined effective ways to reduce employee turnover that address common underlying reasons for leaving as well as a comprehensive guide on employee retention.

Plan check-ups

As with anything important to the business, retention must be monitored on an ongoing basis.

Track key drivers of turnover and maintain ongoing dialogue with employees and leaders. There will always be new information, so establish a simple process to stay on top of your retention and adapt accordingly.

Ensure leaders are having regular one-on-one discussions with their team members for continuous dialogue about their performance, development, and support.

To sum it up: listen to your talent to keep your talent. For more tips about fostering a fantastic company culture, check out this guide:

Originally published on April 10, 2019 → Last updated July 16, 2020

Data and analytics are the next big thing in HR, but do you really know how to implement your findings in meaningful ways?

When we spoke with people analytics thought leader Lisa Donchak of the Wharton School, she explained, “Even 15-20 years ago, there were very few institutions rigorously collecting this data about anything, much less about their employees or who they might want to hire.”

Now, within the last year, Deloitte found 56% more companies are correlating people data to business performance—and 50% more are using people data to predict business performance.

Still, HR analytics is relatively new and often undervalued. “Management guru” David Ulrich took a meta approach to this problem by applying analytics to assess the impact of analytics. His findings indicate the need to focus people analytics on business results and communicate crucial information to the right stakeholders.

In this post, we’ll review what you need to know about data analytics, what data analytics has already taught us about people practices, and how you can leverage the power of people data without an advanced degree in statistics.

What’s the big deal about data?

Data analytics has become a hugely valuable field supporting more informed business decisions, from operations to marketing. Finally, its power has extended to HR.

When Dr. Michael Moon applied analytics within a process methodology, she improved the first year new hire retention rate by 40% for corporate positions:

It was the first time that I used data for something practical. That really was the eye-opener for me. It was very exciting for me to do interviews and surveys, analyze the data, and do a root cause analysis of what was going on, and then to be able to make suggestions as a result.

Modern HR isn’t bumbling Toby in The Office—and it isn’t the efficiency consultants in Office Space, either. Analytics blows past these tired stereotypes by boosting HR’s credibility and effectiveness with data-based insights that complement emotional intelligence and experience-based wisdom. Analytics can also help reduce existing biases for real or perceived discrimination or favoritism.

Analytics is more than analysis

HR is approaching big data with traditional employee data, survey data, and external talent supply and demand data in addition to more creative sources like wearable devices, email analysis, and social media.

But raw data is meaningless. Even summarized in reports, data is only meaningful when organizations can interpret that data and how it can be applied toward their goals.

Analytics links data together to tell a story

There are several levels of people or workforce analytics:

• Descriptive analytics are metrics: interview-to-hire ratios or average training attendance.
• Cognitive analytics are insights: training sessions with the highest return on investment.
• Predictive analytics are a forecast: expected skill gap for various recruitment scenarios.
• Prescriptive analytics are a direction: what training do which employees require to address that skill gap.

Analytics can go beyond reporting on past data to assess how significant trends are and what they could mean for the future. Competitive organizations need the foundation and competencies to use analytics methodology and technology effectively.

What data tells us about human capital

McKinsey demonstrates the people analytics process with the example of a global quick-service restaurant chain:

1. Start with a red flag metric.

• Turnover higher than the competition

2. Define goals and corresponding metrics.

• Revenue growth per store
• Average customer satisfaction per shift
• Average speed of service per shift

3. Build from internal data sources for relevant information.

• Online psychometric assessment games
• Employee surveys on management practices
• Sensors for amount of movement and speech

4. Analyze for correlations between key variables.

• Logistic regression and unsupervised learning models
• Confirm or refute internal beliefs about what impacts goals

5. Interpret insights and application of findings.

• Hire for focus, not friendliness, because it correlates with performance
• Motivate with culture and career development, not variable compensation

6. Pilot implementation and measure impact.

• Sales increased by five percent in four months
• Customer satisfaction increased over 100%
• Speed of service improved by 30 seconds
• Turnover reduced substantially

Your people are likely your biggest investment, so even basic fiscal responsibility should encourage you to make your people decisions more data-driven.

What data tells us about recognition

Within talent management and company culture, employee recognition suffers from a lack of hard evidence in comparison to areas like recruitment and training. But just because employee recognition is less concrete doesn’t mean it’s any less valuable to an organization’s success and bottom line.

Studies show that recognition can increase:

• Engagement by 60%
• Productivity and performance by 14%
• Conscientiousness, collaboration, and creativity

With its Watson Talent Insights solution, IBM applied analytics to demonstrate how employee recognition significantly predicts employee engagement and employee experience. Bolstered by these findings, IBM dove deeper:

IBM used cognitive tools to show how non-monetary rewards had diminishing returns—there was a tipping point when non-monetary rewards stopped increasing engagement. The data showed that engagement was highest with a balance of frequency and monetary value. Rewards of high monetary value given too infrequently, for instance, also resulted in diminishing returns.

Leadership development consultancy Zenger/Folkman found surprising insights emerge from 328 managers’ 360-degree feedback surveys and self-assessments:

• Manager assessment of their own feedback correlated with negative feedback, regardless of positive feedback.
• Meanwhile, 360-degree ratings on manager feedback correlated with positive feedback, regardless of negative feedback.

Leaders may have believed their duty was to identify errors, but evidence indicated that positive reinforcement and support were more helpful.

How to use data for effective employee recognition

Any organization can benefit from HR analytics. The following ten recommendations will help you enrich your business decisions with people data.

1. Learn from others. Different functions, organizations, and academic studies can teach you how to use analytics and reveal what they have already gleaned from it. Based on research to date, employee recognition programs are most effective when they are social, and continuous.

2. Collect data. Even if you don’t have a system in place to use the data yet, start collecting it now. Begin with a system to track and quantify employee contributions and how other people recognize them.

3. Clean data. Your credibility depends on the quality of your data. If your systems are slow, you could have old data, and if your processes are prone to error, your data could be inaccurate. Ensure that your HRIS is up to date with good governance practices.

4. Sharpen technical skills in HR. There’s a lot you can accomplish with data using software you might already have, like Excel. You can learn about Excel and analytics on Lynda or YouTube. Ensure your team can implement appropriate statistical methods and interpret the results accurately.

5. Budget creatively. If you don’t have a budget for analytics, look for opportunities to redirect from relevant budgets that will benefit from analytics. Evaluate the costs and benefits of action vs. inaction with the support of the finance department.

6. Trial a tool. Try software that will allow you to securely store, easily access, and analyze your own data. For example: McKinsey offers a free survey and report for organizational health.

7. Bring together diverse skills. Look to senior leaders, finance, marketing, operations, external experts, and/or technology for competencies in data science, statistics, visualization, industrial/organizational psychology, storytelling, consultancy, change management, and business acumen.

8. Focus on business. Learn what drives sales growth, customer loyalty, and product innovation. Identify quick wins with clear business impact before directing your efforts toward more narrowly focused HR goals. Observe how your people align with your stated culture and values based on the recognition they give and receive for demonstrating those values.

9. Remember the people in people analytics. Humanize the data and explain its usage in a simple way that respects employee privacy. When you make a meaningful decision, be transparent about the analytics insights that informed that decision and how they were evaluated with other sources of information.

10. Communicate the value. All stakeholders, including employees need to understand how they can benefit from people analytics. An internal social feed increases the value of recognition and highlights contributions. Reviewing aggregate data helps organizations identify performance trends among employees, teams, and the organization.

Going forward

HR analytics involves applied science, emotional intelligence, business acumen, and strategy. It’s complex and it’s new. Breaking it down into actionable, achievable steps will help you improve your people practices and stay competitive.

One HR analytics employee at an organization with nearly 100,000 employees emphasizes that the field is still in development:

Continuous process improvement and continuous learning should be embedded and reinforced in business culture.

As organizations figure out how to use HR analytics for their best impact, leaders need to be open to suggestions for improving the analytics process and implementing insights.

If you're ready to take the next step toward building a stronger organizational culture, check out our latest guide:

Most employee recognition programs position senior leaders as champions or role models, not candidates for feedback. In fact, everyone can improve in some way; everyone’s drive wavers sometimes, and money is not always the best motivator.

For leaders with greater influence, continuous personal improvement and targeted motivation can have a significant impact on an organization. Senior leaders make excellent champions and role models for receiving recognition as well as giving it.

That’s why their participation is so crucial.

Senior leaders are people, too

CEOs have weaknesses, feel uncertain, fear failure, make mistakes, and need help — just like everyone else. Worse, CEOs are at greater risk of isolation.

Personal recognition can help meet human needs for approval, self-esteem, and affiliation. It reduces stress, increases collaboration, and motivates people to improve themselves and help others. This is true for all people, including leaders.

“Everyone wants to be appreciated, so if you appreciate someone, don’t keep it a secret.”
— Mary Kay Ash, Founder, Mary Kay Cosmetics

Continuous improvement in the C-suite

Executives have emotional needs to address, but they also need to build their skillset to do their jobs well — again, just like everyone else. Feedback from colleagues can promote personal and professional growth in real time. When it’s lacking, there is a significant cost.

Half of externally-hired executives fail. It turns out isolation isn’t just unpleasant — it can be debilitating to a leader who relies on information and execution from others.

Still, a ten-year longitudinal study found that 55 percent of Fortune 1000 executives continue to lack coaching and feedback. Like any employee whose only feedback comes in an annual performance review, executives are surprised to learn what could have helped them months ago in their leadership and business decisions.

Leading the leaders

CEOs and their direct reports need to work well as an executive team.

But executives can’t depend on direction coming from the CEO or Board of Directors like a regular team leader might because executives’ superiors can’t often directly observe their performance. If executives only receive recognition for formal presentations and financial reports, they are less likely to understand what’s really important, and what’s really working.

As former vice chairman of Goldman Sachs, Robert Kaplan, asks: “Who actually observes your behavior on a regular basis and will tell you things you don’t want to hear?” The answer, most often, is subordinates.

Connecting with the workforce

The fact that leaders are human is not a flaw. In fact, their humanity is a distinct advantage.

Effective leaders, in business as in politics, emotionally connect by sharing anecdotes and their own vulnerabilities. They demonstrate to others that their concerns are valid and understood.

Some executives, however, dismiss or downplay recognition directed at them or their team. Taking this stance immediately diminishes the value of recognition to everyone around them and sends a message of superiority rather than humility, furthering the divide between the top and the rest of the organization.

Intentionally or not, leaders drive culture. If an executive encourages her employees to adopt a recognition program but chooses not to participate, she is creating a cognitive dissonance that undermines the program's values. For recognition culture to be adopted across a team or an organization, leaders must be actively involved.

Building a recognition culture

Executive recognition fuels a recognition culture that correlates with employee engagement, productivity, and performance. Yet one study found that senior leadership wasn’t involved enough in recognition at over half of the organizations surveyed — and they weren’t informed enough, at over three quarters.

In another study, two thirds of employees didn’t believe senior leadership supported recognition.

“Brains, like hearts, go where they are appreciated.”
— Robert McNamara, Former President, Ford Motor Company

Recognition from an executive is highly coveted. When senior leaders give recognition well, and give recognition often, they are sponsoring behavior highly valued by employees and beneficial to the bottom line.

When leaders receive recognition, they are reminded how powerful recognition can be at a personal level, furthering the cycle.

Motivating people (including leaders)

The command-and-control or carrot-and-stick approaches to motivation only work when tasks are simple and routine. Executives don’t do a lot of simple and routine.

In one of the most-watched TED Talks, Daniel Pink showed how traditional monetary rewards can distract from other positive behaviors, unintentionally encourage negative behavior, and in some cases actually remove intrinsic motivation where it existed before.

Pink explains how much better autonomy, mastery, and purpose are for motivation, particularly when it comes to more creative and complex tasks. Leaders are generally primed to experience autonomy and purpose, but mastery requires feedback on performance. As they rise through the ranks, they become less and less likely to receive personal feedback.

The standard incentive structure for executives promises high-stakes rewards for short-term financial or operational success. It restricts innovation and narrows the scope of praiseworthy achievements. By contrast, recognition from peers and subordinates occurs in a timely manner, does not limit behaviors, and is not contingent on success.

Offering executive level incentives

Fixed salary is hundreds of times greater for executives than for their employees, and it's not uncommon for them to receive bonuses in times of low or mediocre performance. Executive pay can generate resentment from employees who work hard for less money and with less job security.

The theory most supported by research is that large pay differentials are large incentives to perform and earn promotion. As long as good governance avoids excess pay, big compensation packages are in the best interest of the organization’s performance. Shareholders tend to agree, with over 95 percent voting in support of current executive pay.

When executives are publicly recognized for their efforts, the ways in which they contribute value become more visible to their organizations. Rewarding executives beyond share price can broaden their measures of success to include contributing sustainable, and abstract factors like employee engagement and community relations.

How to give recognition to an executive

Every level of an organization plays an essential role in creating a recognition-rich culture that supports employee engagement and retention, but executives tend to receive the least recognition.

Here are some ways you can change that:

Incorporate recognition in regular events

It isn’t uncommon for a CEO to congratulate a VP for a department’s success in the boardroom or at a company town hall. You can increase the frequency of this type of recognition, including it in the agenda for every executive meeting and town hall. You can likely improve the quality of recognition, too. Acknowledge the team, but don’t forget the leader: coach presenters to highlight the actions that demonstrate company values and have meaningful impact.

"I vividly remember a number of toasts or speeches employees of all different rankings have made during our holiday parties over the years. It’s a great way to differentiate yourself by broadcasting your thankfulness and vision."
— Sam Saxton, Founder, Salter Spiral Stair and Mylen Stairs

Encourage upward feedback

While thank you letters for the boss are more common when an employee is leaving an organization, more constructive times could be project milestones, team achievements, observations of exceptional creativity, or ethical decisions in difficult situations.

"A handwritten note that says something special is always appreciated. Just something that mentions a small detail he or she picked up on or an exchange that we had sounds simple—but it’s truly appreciated."
— Peter Sena, Founder, Digital Surgeons

Encourage two-way dialogue in regular performance discussions so employees are more comfortable giving feedback upward. Provide middle management with guidance on how and when to publicly recognize upper management (i.e., with sincerity and specificity in meetings or on social feeds) so they can serve as examples to others and propel the norm.

Make executives accessible

Involve senior leaders in cross-functional and multi-level projects or committees. You may also set up casual meetings with small groups of employees to ask each other questions and give feedback. This is the same principle companies like Xerox and Fidelity have applied to customer engagement, requiring senior management to speak directly with the people they serve.

Involve executives in program implementation

When Lancope introduced its recognition program, the company started with a week-long pilot for the senior executive team. This level of involvement increases accountability for trying the new system, and gave them more ownership in helping to shape it. The pilot also gave management time to learn the new system before their employees, so they could become better champions.

"My employees all got together and created a scrapbook filled with notes thanking me for my hard work over the year. They were filled with specific instances when I did or said something that positively impacted them. I still have that book because their gratitude was one of the most memorable gifts I’ve ever received."
— Dave Nevogt, Founder, Hubstaff.com

Encourage subordinate coaching

When most colleagues are subordinates, they can easily neglect to give feedback. Reward the people with the courage to directly recognize and challenge senior leaders. Recruit, promote, and include in the room the people who will speak up.

Robert Kaplan encourages senior executives to ask his direct reports, “What advice would you offer to help me improve my effectiveness? Please give me one or two specific and actionable suggestions. I would appreciate your advice.”

Asking Kaplan’s questions may be a big departure from business as usual, but don’t stop there: coach your leaders to probe for clarity, encourage honesty, allow silence, and really listen. As much as possible, establish the norm of publicly thanking people for their feedback and showing how you acted on it.

Showcase leaders outside the company

Identify opportunities for external recognition (i.e., awards or publications) and ensure your leaders are being considered.

Voicing praise for senior leadership both internally and externally is great for your employer brand. Executive recognition helps bolster employees' confidence in leaders and leaders' confidence in themselves.

In conclusion

Like everyone else, executives derive a lot of value from recognition. When they are actively involved in the practice as both givers and receivers, their interactions help establish meaningful recognition as a norm, and develop a stronger culture of appreciation.

If you're ready to start giving more effective recognition across your entire organization, check out our latest resource: