The ROI of
Employee Recognition

The ROI of
Employee Recognition

“What do you consider to be the most helpful piece of guidance in your professional career?”

When our CEO, Pinaki Kathiari, was asked this question, he smiled and steadily replied:“Sincere and specific employee recognition is by far the best ROI that I have ever seen.”

Why?

Nearly 80% of all employees are disengaged at work. According to Gallup’s State of the Global Workplace: 2022 Report, employees who are not engaged or are actively disengaged cost the world $7.8 trillion in lost productivity. Furthermore, with “The Great Resignation” trend still surging (per PwC’s Global Workforce Hopes and Fears Survey 2022), it is important to remember that retaining an employee is much more cost-effective than adding a new one. Work culture and sense of belonging are essential factors in an individual’s decision to stay at an organization. If employees feel respected and appreciated, then they are much less likely to look for new opportunities. Increasing employee engagement is a strategic play on the organization’s end, accomplished partly by relationship-building, individualized acknowledgment, and overall enhancement of employee experience.

Creating a Supportive Space for Employees

A successful CEO must first define their personal leadership values before they can create an engagement-driven and supportive environment for their employees. Pinaki has determined that the most significant value for him personally is to put employee psychological and physical safety first above any business decision. From the employee’s perspective, when they know that the organization has their back in situations that matter, then trust is cemented, confidence is built, and vulnerability is encouraged; therefore, the employee’s focus can shift to simply doing their most efficient and creative work.

How does this further relate to employee recognition and ROI? All these factors create space for professional growth, as feedback is best received by employees when they feel supported and self-assured. Consistently recognizing employees presents an opportunity to provide constant feedback without them feeling piled on or overwhelmed. It builds self-esteem, so they are resilient when they need to hear more challenging criticisms. Pinaki recalls a time when his boss once relied on him for a significant judgment call and stated, “You have to just make the decision. I’ll yell at you if you’re wrong, but you must make the decision.” This sort of exchange is only productive if there is trust and security at the core of the relationship.

Recognizing an employee provides an opportunity to be specific about what exactly management is thanking them for; what is deemed important, well-done, or instrumental to the organization. When specific feedback is provided, it comes across as more genuine, and it is more beneficial. Think of it as a win-win situation; the employee feels good as management simultaneously helps them identify growth areas and reinforces good habits.

Plus, life is just simpler and feels so much lighter when choosing to be empathetic and supportive of one another. Applying that to the workplace environment, work doesn’t feel as much like “work” when there are good relationships among colleagues. Positivity is contagious, invigorating, and motivating. Sincere employee recognition sets the tone for others. Light attracts light.

Enhancing Employee Recognition Programs

So, in addition to traditional employee recognition rituals in the form of promotions, raises, and performance reviews (as none of this is possible unless you pay employees what they are worth to begin with), what are some ways to acknowledge employees? The C-Suite sets the tone of the organization (shout out to CTO/COO Michael Alfaro for helping shape Local Wisdom’s amazing company culture), but it is really a team effort to help uphold these values. Internally, every Monday morning on the Local Wisdom all-team call, the meeting is started by Pinaki thanking everyone for their contributions. Starting with honest and heartfelt vocalization of gratitude helps shake off the “Sunday Scaries” hangover and disarms the intimidation factor that can naturally come with a new work week. Furthermore, at the monthly Local Wisdom roundtable, Lauren Moran, Internal Communications Manager & Strategist, sets aside designated time for employees to give kudos and shout-outs to each other. It is a special exercise and is often commented on by Local Wisdom employees as a genuine boost to team morale. Dan Spedaliere, Production Director, sincerely cares for the team’s work-life balance and acts like a personal bodyguard to make sure boundaries are set and respected.

A few other ways that Local Wisdom has found to be successful in creating an emotional connection with its employees:

• Applaud work anniversaries and major milestones…plus also celebrate in-between or more low-key milestones as well.
• Give gifts in recognition of a job well done in the office, or even in recognition of a personal life event.
• Be mindful of your team’s workload, and when possible, reward them with additional free time. Impromptu “early” dismissals or extended holidays can feel like bonus time.
• Do random acts of kindness or silliness…keep it light!
• Carve out time to connect on a human level at company events and make everyone feel seen, included, and important.

Externally, on social media platforms, Local Wisdom recognizes its employees publicly by celebrating their accomplishments and offering them a “Round of Applause” in an Employee Spotlight post. Moreover, the most talked about aspect of the Local Wisdom website by clients and unique visitors is the interactive “Team” bubble chart. This chart humanizes the organization and is another subtle way to recognize employees as individuals rather than just workers, highlighting both their professional strengths and personalities.

Investing (a Little Bit of your Heart) in the Form of Vulnerability

Above all else is the most obvious aspect of the statement that employee recognition provides the best ROI: Not only is it invaluable in itself, but it also costs very little or nothing at all. The investment of your energy, focus, and vulnerability is meaningful. The time investment is not excessive, and the potential reward is limitless.