September 7, 2021 0 Comment

Impact of Employee Rewards and Recognition on Retention

Most organizations today are constantly struggling to find an effective solution for employee retention. Employee turnover results in loss of money, time, and effort and disrupts the smooth functioning of the organization. So, organizations should assess the impact of employee rewards and recognition on retention and put appropriate programs in place.

Most organizations are often unaware of the deep connection between employee rewards and recognition and retention and lose out in the form of loss of good employees.

What is the Connection between Employee Recognition and Employee Retention?

It is a common misconception that the employees seek only good salaries, benefits, and other financial incentives from their jobs. Hence, many organizations focus only on offering financial benefits for their top performers, but are still not able to retain them.

This is because most high performing employees crave for recognition and respect as much as they seek financial benefits. For such employees, rewards and recognition provide a sense of self-fulfillment which keeps them motivated to give their best performance.

Employee Recognition at a Global Tech Company

That is why organizations without a proper rewards and recognition programs may not be able to retain them for long.

As mentioned, employees need to feel valued and appreciated for their contribution to organizational growth. A proper employee recognition program enhances the overall engagement levels of employees:

Here are the key reasons how employee rewards and recognition has significant impact on employee retention:

Impact of Employee Rewards and Recognition on Retention

1. Motivates Employees

Early Bird

Being recognized for their efforts, initiatives and skills, makes employees feel motivated to repeat that behavior. This encourages them to further improve their performance to ensure that so that they can get more rewards and recognition.

So, being valued for their work by the organization, develops a sense of loyalty among the employees towards the organization. Hence, such loyal employees are less likely to leave the organization for other opportunities.

2. Enhances Employee Happiness

Social Recognition as a Multiplier for Employee Recognition?

When employees feel that their hard work is not going unnoticed, they tend to feel happier and satisfied at work. So, they become more willing to take up challenging tasks with positive mindset and are able to raise their performance levels.

Hence, most importantly, happy and satisfied employees are less likely to seek employment opportunities elsewhere.

3. Promotes a Positive Work Culture

Integrating Employee Recognition with the Organizational Culture

When employees feel happy and satisfied in their workplace, it tend to develop a positive and friendly work environment. So, it helps in creating a fun-filled work culture based on mutual trust and understanding. Employees develop a strong sense of team bonding and comfort. Such employee feel a lesser need for leaving the organization and taking up a job with another organization.

The rewards program thus helps in improving employee loyalty and creating positive work culture with healthy competition between peers.

4. Creates Better Relations with Superiors

Peer-to-Peer Recognition versus Manager Recognition

One of the major reasons for employees leaving an organization is their poor bonding with their superiors. However, when employees are recognized for their efforts, they feel assured of the support and appreciation of their superiors. Therefore, it helps the employees to view their superiors from an entirely different and most positive perspective.

So, supervisors are able to better utilize the skills and productivity of employees and appreciate them openly. Also, it can help in creating better mutual understanding and trust between employees and their superiors.

5. Increases Customer Satisfaction

Decide On The Extent Of Customer Involvement

When employees are appreciated for their work, they tend to show greater effort towards improving customer satisfaction levels. Rewards and recognition results in a significant improvement in their performance and efficiency while dealing with customers.

Moreover, it helps improve trust and camaraderie of customers with employees, which leads to higher business growth and profitability.

Hence, such employees are often treated as the brand ambassadors for the organizations and can help in attracting more customers. They can also help in attracting top talent for their organizations and retaining existing ones.


While salary, financial perks and benefits play a vital role in attracting top talent, their retention in the organization depends significantly on the effectiveness of the employee rewards and recognition program – how efforts and contribution of employees are recognized and rewarded.

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HiFives ( is an employee rewards, recognition and engagement SaaS platform that enables organizations to digitize, automate and transform their employee experience. The platform enables supervisors and co-workers to nominate, recognize and reward employees using a points-based system. Budget management, jury-based evaluation and multi-level approval workflows are built into the platform. HiFives has social features such as a wall of fame and gamification features such as leaderboards, e-certificates and digital badges. It also has a global redemption system with country-specific e-gift card options. HiFives integrates with all leading HRMS systems, Office 365, Google Workspace, MS Teams, Slack and other popular tools used at the workplace. HiFives is used by many large enterprises, small businesses and startups across 25+ countries in the world, in many industries including manufacturing, retail, technology, financial services and media.