Employee Retention Depends on Getting Recognition Right

Organizations face constant risk of losing their top talent, shouldering the cost of their replacement and managing the cultural disruption of their exit. Gallup finds that in May 2024, 51% of all U.S. employees were watching for or actively seeking a new job. But much of this turnover risk is preventable.

New research from Gallup and Workhuman evaluated the relationship between recognition and turnover by tracking the career paths of nearly 3,500 employees from 2022 to 2024. The findings strengthen existing evidence that employees who receive high-quality recognition, defined by five pillars of strategic recognition, are more connected to their organization’s culture and more likely to stay at their organization years into the future.

Employees Who Receive High-Quality Recognition Are Less Likely to Leave

The key takeaway from this research is that employees who receive high-quality recognition are less likely to leave their jobs. Longitudinal data from 2022 to 2024 show that well-recognized employees are 45% less likely to have turned over after two years. In 2024, new findings show that the risk of future departures is further reduced when looking at employees currently receiving high-quality praise that fulfills at least four pillars of strategic recognition. These employees are 65% less likely to be actively looking or watching for another job opportunity compared with those receiving lower-quality recognition.

Turnover is expensive for organizations. Gallup estimates that replacing leaders and managers costs around 200% of their salary, replacing employees in technical roles costs 80% of their salary, and replacing frontline workers costs 40% of their salary, excluding unmeasured losses in morale and knowledge.

When a top performer leaves, it can cause other employees to reevaluate their own roles, worry about job security or even question the company’s future. Voluntary turnover can also eliminate role expertise gained over years of performing well and disrupt workplace friendships that boost engagement. The costs extend beyond monetary losses.

Despite recognition’s proven impact on key business outcomes, initial Gallup-Workhuman research in 2022 revealed that the substantial benefits of strategic recognition remained unrealized in most organizations. At that time, only 19% of senior leaders and managers said employee recognition was a major strategic priority at their organization. By 2024, senior leaders were 50% more likely to strongly agree with the value of recognition (42% vs. 28% in 2022).

While leaders are increasingly acknowledging the importance of recognition, employees are not feeling the effects. Just 22% of employees say they get the right amount of recognition for the work they do, unchanged from 2022. But the five pillars of recognition offer a way to bridge the gap between leadership priorities and employees’ daily experiences.

Build Quality Recognition With the Five Pillars

Implementing quality recognition should be incremental, well-defined and personalized. Gallup and Workhuman have identified five essential pillars of strategic recognition in the workplace to build a culture that prioritizes and consistently delivers high-quality recognition.

More than half (55%) of U.S. employees either do not receive recognition at all or do not receive recognition that satisfies any of the five pillars of strategic recognition. However, employees who receive recognition that meets at least four pillars are nine times as likely to be engaged as employees whose recognition experiences do not fulfill any of the five pillars. And meeting all five pillars can have a transformational impact on key outcomes like engagement and turnover.

While meeting most of the pillars is ideal, employees who receive recognition that satisfies even one of the pillars are 2.9 times as likely to be engaged as those who receive recognition that does not meet any of the pillars. Leaders can create an intentional plan to introduce additional pillars to realize the full potential of strategic recognition.

An Increasing Focus on Employee Recognition

Leaders can create a competitive advantage by integrating high-quality strategic recognition across their organizations. While more U.S. leaders are acknowledging the increasing need for recognition systems, many organizations still underappreciate the full power of recognition.

Recognition is a powerful and cost-effective way to improve organizational performance. When implemented with intention and backing from employees, strategic recognition using the five pillars is proven to help facilitate drastic, long-lasting improvements in both retention and employee engagement, two of an organization’s most vital outcomes in the modern workplace.