Recognition from managers key to retaining employees, study shows

Wednesday, 13 June, 2012

More than three-quarters (77%) of employees would consider leaving their organisation if they weren’t recognised for their contribution, and one in four are already actively seeking a new job or intend to in the next three months, according to employee engagement specialists RedBalloon for Corporate.

Managers are receiving the bulk of the criticism, with 44% rated ‘very poor’, ‘poor’ or just ‘satisfactory’ at delivering praise; three quarters of employees are starved of recognition, receiving it only monthly, quarterly or once a year; and 11% receiving no praise at all.

These insights come from the 2012 RedBalloon Reward and Recognition Survey, which studied more than 4000 businesses across Australia and New Zealand to gauge the current trends, attitudes and behaviours around employee reward and recognition programs.

The findings back up those of a 25-year-long Gallup study - based on interviews with 12 million workers at 7000 large companies - which also found that the relationship with a manager largely determines the length of an employee’s stay.

According to RedBalloon for Corporate General Manager Matt Geraghty, “Retention is one of the biggest issues facing businesses right now and with the cost to replace someone estimated at 150% of their salary, simple maths demonstrates the return on investment of a successful reward and recognition program.

“In tough economic times, it’s your people that will get you through, and if businesses invest in and show their employees appreciation now, they’ll stay for the long term.

“Similarly, it’s unrealistic for employees to expect significant raises in the current economic climate - but a well thought-out and effective reward and recognition program can help keep your employees feeling valued and motivated for a fraction of the cost of increased pay packets.

“Businesses need to encourage and empower managers to unleash the power of praise, and managers must invest the time to get to know their people and what inspires and drives them - how else can they expect to build trust and retain employees over the long term?”

The report also shows that rewards alone will not give you happier employees. Almost half (46%) of respondents would opt for recognition over a reward when being thanked; 50% want recognition and something physical, such as an experience, a gift voucher or time off from the office; and only 4% of employees would be happy with a reward alone.

The role of managers in this process is key, with 51% of respondents seeking acknowledgment from their direct manager, 35% from peers and colleagues, and only 14% from the CEO.

Recognition is most important to Generation Y, with 86% prepared to leave an organisation due to lack of recognition, compared to 77% of Generation X and 63% of Baby Boomers.

“Organisations cannot afford to put lip service to this - any acknowledgement needs to be authentic, personal and relevant to a specific activity. Saying thanks and ‘you’re a good bloke’ is not enough. People need to know what they did specifically that contributed to a business result,” Geraghty said.

“The study highlighted that 42% of businesses do not have a reward and recognition program in place, which does not bode well for those who are considering leaving for lack of thanks.

“But just as worrying are the 57% of companies providing a substandard reward and recognition experience, as employees are five times more likely to leave their organisation if their business provides a poor program.

“We are calling this the ‘recognition retention multiplier’, and it represents is a big opportunity for businesses to pull up their socks.”

Other results from the survey are below.

Top things employees want to see improved in their business right now

20% - pay, benefits and conditions
15% - work-life balance
12% - rewards and recognition
12% - systems and processes
9% - communication
9% - career progression
8% - training and development
7% - culture
5% - leadership/senior management
4% - my boss