Recognition and awarding as a retention strategy

 In the present era of global competition, companies must reconsider their strategies for recognizing and retaining talent, with employee recognition and reward being one of the aspects that business leaders must address in order to reduce voluntary turnover and retain skilled staff (Mngomezulu et al., 2015).

 The employee recognition defined by The Australian Office of the Commissioner for Public Employment (2011) states that “Employee recognition is a return on an employee's effort, dedication at work and results”. Moreover, Brun and Dugas (2008), described employee recognition as a "constructive response" and "judgment" about a person's performance, whether consistent or sporadic, individual or group, private or public, monetary or non-monetary, and conveyed formally or informally.

 In terms of employee rewards, "all forms of financial return, tangible services, and benefits an employee receives as part of an employment relationship" were identified and interpreted by the study conducted by Malhotra, Budhwar, and Prowse (2007).

The authors further explain that employees anticipate receiving satisfactory results from their employers in terms of assigned tasks, and they expect receiving fair compensation (rewards) for the effort they put in. However, the quality of the company's existing reward and recognition program can impact whether the organization's performance improves or declines. There are five key success factors of a fruitful employee rewards and recognition strategy that make it connect with and support the company's HR policies and overall business strategy (Madhani, 2020).

1. Holistic

To be truly effective, a rewards and recognition program must consider the "Value Proposition" of the company as a whole.

 2. Integrated

Every part of the rewards and recognition program needs to mesh together with each other parts of the program.

 3. Aligned

The company's HR and business strategies should be supported and further developed by its rewards and recognition program.

 4. Measurable

The strategy for recognizing and rewarding employees should be centered on data and analysis.

 5. Delivered

The long-term benefits of a rewards and recognition system can only be realized with thorough and regular communication, management, and monitoring.

 According to above five key success factors of rewards and recognition identified by Madhani (2020), a more comprehensive, efficient, and complete HR strategy can be developed as a result of combining recognition with rewards.

Additionally, with the tangible and intangible rewards that are granted to employees in order to entice them towards a desired outcome, recognition plays an important role in preserving employee motivation (Madhani, 2020). Furthermore, Saunderson (2004), highlighted that there are three sorts of recognition as organisation-wide formal recognition, departmental-specific informal recognition and everyday spontaneous recognition.

 As demonstrated in Figure 1 below, a culture of continual performance improvement in organizations is fostered through a combination of reward and recognition programs (Madhani, 2020).

 

Figure 1

                                    Source: Madhani (2020)

Martin and Ottemann (2016) found that the attitudes and preferences of four distinct generations of workers were most influential in shaping organizational reward practices for attracting and retaining talented employees. The below figure illustrates a table of significant and valued reward and recognition practices and programs preferred by the four types of employee generations.

 Figure 2

                (Martin and Ottemann, 2016)

To elaborate further, the purpose of employee recognition is to enable people to be aware that their effort is respected and appreciated, offers a feeling of belongingness, boosts morale, strengthens loyalty, and enhances employee retention rates in the company (Nyakundi et al., 2012). 

Similarly, Saunderson (2004) describes that effective recognition is precisely available in supportive and robust organizational cultures where the psychology of praising employees is well understood, embrace employee recognition practices and motivate co-workers to take the lead in building positive workplace relationships.

Moreover, rewarding and recognizing employees for their efforts boosts morale, fosters loyalty, and helps keep talented workers from leaving the company, all of which contribute to a more pleasant and productive work environment and a more favourable public perception of the company (Thumbran, 2010). Some of the other impacts of employee rewards and recognition are demonstrated in the below-inserted figure.

 Figure 3

                                 (HiFives, 2019)

Finally, according to the personal experiences and observations of this blog article author in the financial industry of banking, employee rewards highly influence applicant attraction and employee retention. Also, flexible benefits, as opposed to set benefits, are particularly appealing to individuals and corporations.

Nevertheless, banking organizations that are willing to customize their employees' compensation (rewards) arrangements will need to invest additional time to create, execute, and monitor the arrangement, but it will be time well spent.

The financial statements of these organizations illustrate that implementing employee awards raises numerous difficulties for employers. Thus, many workers in the modern economy experience financial difficulties, making it more important than ever for businesses to have solid reward programs in place.

References

Australian office of the commissioner for public employment (2011) Defining employee recognition. Available at: https://ocpe.nt.gov.au/ (Accessed: December 6, 2022)

Brun, J.-P. and Dugas, N. (2008) “An analysis of employee recognition: Perspectives on human resources practices,” The International Journal of Human Resource Management, 19(4), pp. 716–730. Available at: https://doi.org/10.1080/09585190801953723

HiFives (2019) “Impact of employee rewards and recognition on retention,” HiFives, September. Available at: https://www.hifives.in/understanding-the-impact-of-employee-rewards-and-recognition-on-employee-turnover/ (Accessed: December 6, 2022)

Madhani, P.M. (2020) “Effective rewards and recognition strategy: Enhancing employee engagement, customer retention and company performance,” The Journal of Total Rewards, 29(2), pp. 39–48. Available at: https://www.researchgate.net/publication/343628153_Effective_Rewards_and_Recognition_Strategy_Enhancing_Employee_Engagement_Customer_Retention_and_Company_Performance

Malhotra, N., Budhwar, P. and Prowse, P. (2007) “Linking rewards to commitment: an empirical investigation of four UK call centres,” The International Journal of Human Resource Management, 18(12), pp. 2095–2128. Available at: https://doi.org/10.1080/09585190701695267

Martin, T.N. and Ottemann, R. (2016) “Generational Workforce Demographic Trends and Total Organizational Rewards Which Might Attract and Retain Different Generational Employees,” Journal of Behavioral and Applied Management, 16(2), pp. 91–115. Available at: https://www.semanticscholar.org/paper/Generational-Workforce-Demographic-Trends-and-Total-Martin-Ottemann/9fc4b5a50488235b50236b5be8c438c68dbaa938

Mngomezulu, N. et al. (2015) “The impact of recognition on retention of good talent in the workforce,” Journal of Governance and Regulation, 4(4), pp. 372–379. Available at: https://doi.org/10.22495/jgr_v4_i4_c3_p2

Nyakundi, W. et al. (2012) “Enhancing the role of employee recognition towards improving performance: A survey of Keyatta National hospital Kenya,” International Journal of Arts and Commerce, 1(7), pp. 96–108. Available at: https://ijac.org.uk/images/frontImages/gallery/Vol1no7december2012/9.pdf

Saunderson, R. (2004) “Survey Findings of the Effectiveness of Employee Recognition in the Public Sector,” Public Personnel Management, 33(3), pp. 255–275. Available at: https://doi.org/10.1177/009102600403300302

Thumbran, R.S. (2010) Utilizing non-financial rewards as a competitive advantage in attracting and retaining employees. MA Thesis. University of Pretoria.