When job markets get competitive and the number of skilled workers available for each available position starts to fall, there are a number of things that happen. 

First, salary offers start to increase to help attract the best talent. Larger businesses also start to invest more in their employer brand to become a more attractive proposition to help stimulate the number of applications they need. Other companies may look at their benefits packages and see where improvements can be made to attract the talent they need. 

What can also happen is a stronger focus is put upon employee retention and ensuring the top talent already within an organisation isn’t tempted elsewhere by the promise of a loftier job title or a slightly increased pay packet. 

But all these initiatives will likely cost money, and with minimum wages rising, costs increasing and a political backdrop that’s yet to reveal the full extent (or even type) of Brexit which has stagnated investment, that’s something not all firms can budget in. 

But there is one area of people management that has been shown to have a huge impact on retaining employees already within a business - and that’s employee recognition. 

Employee recognition, which is the act of showing gratitude for behaviour or performance, is widely accepted and supported by a body of research to deliver a number of benefits for businesses, including higher motivation and productivity - even per-employee profitability.

But effective recognition within a workplace is far from commonplace, evident in the fact that nearly 70% of the global workforce aren’t engaged with their jobs.

So how can recognition increase retention? What’s the link?

Recognition and voluntary turnover

Voluntary turnover is the most problematic element of employee churn for the majority of companies as it often covers their top workers who are attracting offers from elsewhere. And why do these employees leave? 

Sure, better pay and more seniority are two of the top reasons, as well as investigating whether or not the grass really is greener on the other side. 

But the top reason why employees leave isn’t pay or job title - it’s actually a lack of appreciation. 

Research from OC Tanner has found that 79% of employees who recently quit their job did so because they felt under-appreciated - a huge figure which highlights an underlying problem when it comes to the way the majority of organisations show recognition to their staff. 

Reinforcing this was 65% of US workers saying they haven’t been recognised once in the last year - indicating the scale of the issue. 

But finding a link is one thing - what is it that a lack of recognition results in which causes the desire to seek pastures new?

Part of the problem is the relationship with management, another direct reason why staff quit. 

Research from oGoLead found that 82% of staff say they don’t feel their direct manager doesn’t recognise them for what they do. Yet recognition from higher-ups is the most powerful form of gratitude a worker can receive.

Another issue is a sense of belonging. When employees are recognised for a job well done, or for putting in a great amount of effort over a sustained period, recognition for that contribution helps cement that feeling of purpose, inclusion and being an important part of that organisation. 

These are critical factors for younger workers in particular, with millennials’ view of what matters most at work widely differing from older generations. A lack of recognition can leave staff feeling somewhat out in the cold, with a lack of positive feedback on a regular basis giving them no indication as to how they’re doing and, most importantly, that they’re positively contributing to a wider business objective and vision.

The takeaway? If you have a retention problem, you may indeed have a recognition problem too. And whilst it may be easy to think almost cynically that really what your current top workers want is more money when they’re threatening to leave, it’s worth noting that research has found that 60% of workers are motivated by recognition more than money. 
Feeling that you belong, are a key component delivering wider business achievements and are valued by both colleagues and management are far more important in the career decision-making process for workers than you might have thought.