How Recognition Tech Transforms Employee Retention Strategies
After a big layoff, retention is key — but more money isn’t the answer
Discover how to enhance employee retention beyond compensation. Learn about recognition technology’s role in fostering engagement, particularly in remote work settings, says Raphael Crawford-Marks of Bonusly.
Everyone wants to get paid, but if compensation surpasses a certain level, additional money won’t move the needle on employee retention. That’s because employees are not coin-operated machines. Employees need more than the money. They need to be engaged, feel a sense of purpose about their work, their skills and career progress, and belonging with their team. Especially in our increasingly remote world, that’s difficult to do. Technology can help, but HR and people leaders need to ensure that it truly addresses the problem of retention instead of simply appearing to do so.
Given the significant layoffs in tech that have been appearing regularly in headlines for months, one can be forgiven for thinking that employee retention is not a high priority for these organizations. But that’s far from the truth. Keeping employee retention high is usually a top priority for companies that have just executed a layoff.
When planning a layoff, companies keep their most valuable employees. After all, they’re betting their future success on those who remain. Unfortunately, those employees who are spared are much more likely to leave. A 2023 study in The Academy of Management Journal studied 1,620 retail stores over 22 months and found that a layoff caused almost 13 times more employee quits than dismissal and more than nine times more than when employees quit independently. Even worse, when high performers were laid off, the study’s result indicates that additional high performers would also leave.
Most companies will ensure they have a strategy following a layoff to increase retention. However, the highest-performing companies don’t wait until there’s a layoff – they prioritize employee retention at all times. It takes time to build a resilient culture that makes employees want to remain after a shock to the system, like a layoff. If you wait until the layoff has occurred, you’re unlikely to have time to make much of a difference in retaining the high-performers you need to succeed.
The Role of Compensation in Employee Retention
One way companies try to boost employee retention is to increase compensation. This is not a bad idea, but it’s probably not moving the needle very much. That’s because compensation is like hygiene when retaining strong employees.
Let me explain. We can all agree that if you don’t bathe or brush your teeth, negative consequences will likely follow at your place of employment, not to mention in your personal life. But good hygiene doesn’t get you a raise or extra kudos from the boss. How often do you hear an employer say, “Hey Pat, looks like you’re showering three times a day! Good job going the extra mile with cleanliness!”
Compensation is like that. There’s a certain level that has to be met to retain talent. People who know their employer isn’t paying them a fair market wage are likely to go find another job that will. But beyond that critical threshold, more money doesn’t contribute nearly as much as other factors to increase employee retention. In a 2022 report, Gallup found that factors relating to engagement and culture were the top reasons for employees leaving and that they drove 40% of departures compared to 20% for pay and benefits.
Fair compensation is critical to employee retention, but going above and beyond fair just doesn’t meaningfully improve employee retention. Fostering positive psychological and social ties between employees and their peers, managers, and company leadership is far more important.
See More: Make Your Employees Feel Recognized
Recognition Technology Is Needed Now More Than Ever
Engaging and retaining employees certainly hasn’t gotten any easier since 2020. At the end of 2022, 28% of the workforce was exclusively remote, and another 52% were hybrid, which means that those conversations at the coffee maker and spontaneous decisions to go out after work are either nonexistent or much less common. These organic interactions greatly facilitated the positive connections necessary for employee retention. Still, with the workplace now largely virtual, these everyday interactions can no longer be relied upon. After all, how often does anyone continue chatting with colleagues after a Zoom meeting or organize an impromptu social gathering at a pub after work? Organizations need a digital means of engaging their employees and teams to facilitate and encourage recognition of each employee’s value and contributions.
Today, a wide array of software solutions are built to increase engagement. When implementing a technology-based solution, it’s important to ensure it will be effective.
Here is what makes for a recognition program that increases productivity and retention:
- Easy and intuitive: Recognizing a coworker within the technology solution must be simple. People are busy, so you want to keep the friction to an absolute minimum. Detailed forms to fill out or a clunky interface will reduce the amount of recognition that employees give.
- Diverse types of recognition: Some people want to be recognized differently. For some, recognition from peers is most powerful. For others, it’s recognition from managers or achievement awards like Core Values or Top Seller awards. For another group, receiving recognition on special days, like birthdays and anniversaries, matters most. It’s important to select a solution that enables many forms of recognition while keeping administrative overhead minimal.
- Frequent and inclusive: Recognition from managers is extremely powerful, but let’s face it: more and more work is being done by teams and, in many cases, teams of remote or hybrid employees. Managers can’t see all of the contributions their reports are making. That’s why making a recognition program inclusive – enabling all employees to be both givers and recipients of recognition — will maximize the program’s impact.
If the technology is working, each employee should be receiving an average of one or more specific, meaningful recognitions every week.
See More: 4 Ways to Foster a Culture of Recognition in the Workplace
Industry Applications
Recognition platforms are generally a horizontal technology that can apply to any industry. However, each industry has unique HR challenges that recognition can help address. Here are a few examples:
- Technology: The technology industry has changed enormously over the past ten years. It’s a fast-moving, high-pressure environment, and since the pandemic, many software teams have gone virtual, with employees working remotely. It’s easy for colleagues and managers to get so focused on deadlines and code that they overlook letting their co-workers know how much they appreciate their work.
Skilled technologists, in particular, are difficult to hire and retain. Recognition platforms can help strengthen team connections, raise morale, improve engagement, and increase retention. - Healthcare: Burnout has always been a particularly difficult issue for the healthcare industry, and the pressures of the pandemic made the problem exponentially more severe. Nurses, technicians, and even doctors leave the profession in record numbers, with low morale.
A recognition platform can help alleviate some of the pain. Again, as with IT, healthcare is a fast-moving, high-pressure industry, but the stakes are often life or death. A platform that facilitates recognition helps healthcare workers see that their work truly matters. Through a recognition platform, healthcare organizations can create a culture of appreciation that, in the long run, can increase morale and improve retention, ultimately improving the quality of care. - Manufacturing: A manufacturing company would need help using a recognition platform, but non-desk employees can reap recognition benefits with the right tools. Mobile apps, digital signage, and kiosks are all helpful ways to increase recognition visibility for workers who are off a computer all day.
Manufacturing needs help retaining and attracting talent. According to a Deloitte report, manufacturing is on track to have 2.1 million unfilled jobs by 2030, which means manufacturing companies must hold on to the talent they already have. As illustrated above, creating a culture of recognition and appreciation can go a long way toward achieving that goal.
Cultivating a Culture of Appreciation
Compensation is important, but it’s far from the only factor in employee retention. After a large layoff, HR and people leaders must focus attention on ensuring that the employees who remain feel that their work is meaningful and that their team members value them. However, organizations shouldn’t wait until the layoff to roll out a strategy to build a culture of appreciation. Implementing a technology solution to facilitate recognition can support and facilitate the creation of this kind of culture, but only if it is simple to use, tracks back to core values, elicits frequent and specific recognition, and provides data and insights that inform key business decisions.
How can recognition technology drive engagement in remote work environments? Let us know on Facebook, X, and LinkedIn. We’d love to hear from you!
Image Source: Shutterstock
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