Every year a typical company loses between 20%-50% of its employees (the average turnover varies by industry), and replacing each of those lost employees costs about 150% of each employee’s annual salary, according to a recent report by Bain & Company, a management consulting firm. Companies looking for a better retention rate need to implement strategies to keep employees loyal, says Kyle LaMalfa, a loyalty expert at Bain & Company.
The smartest way to safeguard employee loyalty is to make sure employees are engaged by giving them meaningful work and showing them how what they do contributes to the company’s bottom line, LaMalfa says. Employers need to make sure employees are connected to their businesses. Bain’s research shows that “emotionally connected employees are the best employees because they’re engaged and productive, and they feel validated and appreciated.”
But where some companies lag, LaMalfa says, is in properly recognizing and rewarding their best employees. Here are three steps to create a successful employee recognition program that will keep everyone happy (and encourage them to stay!).
Step 1: Don’t wait too long to dole out awards. Establish of program of regular, short-term rewards. Jane LeFebvre, an incentive consultant, works with a large health-care institution to reward employees on milestone anniversaries. “When I first started working with them, they provided rewards to employees every five years,” LeFebvre says. The problem was that the health-care firm lost most of its employees within their first few years, before they even had a chance to receive an anniversary award.
“My idea was to give lots of rewards to employees earlier in the process, at two, four and six months,” she says. As an example, the hospital’s nurses (who often brought their own lunches), received branded lunch boxes after their first two months on the job, along with a thank-you note from their new managers for an outstanding first two months and coupons for free drinks at the facility’s cafeteria. At four months, the nurses got a plant or floral arrangement with a handwritten note from their managers commenting on how well they were doing. At six months, the nurses received logoed ink pens with their name and the hospital’s name on them, along with an attractive branded wall calendar that would help them keep track of their busy work schedules.
“As an employer, you want people to feel like they matter right away,” she says. “If you wait until a big anniversary, you’re going to lose people.”
Step 2: Put it in writing and make sure your company’s leaders are involved. Experts from Bain & Company state that rewards are more powerful when they come to employees in several forms at the same time. For example, a manager who presents a floral arrangement or plaque to an employee can verbally thank and praise them, and write a note that documents the reason why he or she deserves the reward. Around the same time period, someone a level above the manager might also stop by or write a note acknowledging how much he or she appreciates the employee. Susan Healthfield, an HR expert, says that often in company exit interviews, a common complaint is that the employee never felt the company’s senior leaders knew he or she existed. So involving leaders in the rewards process is important, she says.
Step 3: Go public. It’s just human nature that people like to be recognized among their peers. At the health-care firm that LeFebvre works with, there is a monthly recognition lunch for nurses where the milestone rewards are given out. In addition to the semi-monthly awards, the company gives out special awards to nurses who are nominated by their peers for outstanding work that month. The rewards vary from spa gift baskets to logoed soft jackets, but they’re always appreciated, LeFebvre says. And the fact that they’re given out in front of the nurses’ peers is very important. “People want to know that they’re appreciated, so recognizing them in public is one way to do that,” she says. Besides a public ceremony or lunch, Healthfield says the company can do other things to make the recognition public, like including it in a company newsletter, or the company Intranet, or on a bulletin board in a break area. Another idea is to give the employee a letter of recognition, in addition to the gift, and make it clear that the CEO will get a copy of the letter. “It’s impossible to over-recognize someone,” she says. “Most employers do the opposite.”