5 Reasons Smart Companies Reward Employees

Think that rewarding employees is all a bit soft and mushy? The preserve of HR geeks and not a serious business strategy? Then you definitely should read these 5 paragraphs below!


Reason #1: Customer Satisfaction
Smart companies realise that happy employees make for happy customers. To improve customer satisfaction, the best place to start is with your employees. A 2012 survey found that 41% of companies that use employee recognition have gained significant increases in customer satisfaction ratings. [Source:  SHRM/Globoforce Fall 2012 Report].


Reason #2: Sales
According to an analysis by Aon Hewitt, for every 1% increase in employee engagement, you can expect to see an additional 0.6% growth in sales for an organization. [Source: Aon Hewitt – 2013 Trends in Global Employee Engagement]

And as only 30% of employees are actively engaged with their company, and almost 1 in 5 are actively disengaged. [Source: Gallup State of the American Workplace Report 2013].

So it makes a lot of sense to reward employees for their discretionary effort if you want to promote a “sales” culture throughout all functions of your organisation.


Reason #3: Staff Turnover
The worm has definitely turned in the Irish labour market, and now recruiting and retaining good staff is harder than ever before. In fact, a 2015 survey revealed that the top challenge faced by HR managers was employee turnover. [Source: SHRM/Globoforce Survey 2015 Employee Recognition Report].

The good news is that organisations who operate engaging employee recognition programmes have 31% lower voluntary turnover than organisations with ineffective or no recognition programmes. [Source: Bersin by Deloitte, The State of Employee Recognition, 2012].

A survey 1,389 companies in 24 countries found that where companies rewarded employees, they were 25% less likely to have problems attracting top-performing employees. [Source: 2009 Human Capital Institute – The Value and ROI in Employee Recognition].

Which is really significant when you consider that it costs between 30% and 50% of an employee’s salary to replace even an entry level employee. [Source: Willis Tower Watson – 2012 Global Workforce Study]!


Reason #4: Productivity
Only this year, Gallup produced a report which showed that there is a 20% difference in productivity levels between organisations with high levels of employee engagement compared to those with low levels.

The same study revealed a massive 41% difference in absenteeism levels. [Source: Gallup 2016 Q12 Meta-Analysis: Ninth Edition]


Reason #5: Profitability
Companies with high sustainable engagement report operating margins almost three times higher than other companies. [Source: Towers Watson Global Workforce Study 2012].

There is a 21% increase in profitability among organisations with the high levels of employee engagement compared to those with low levels. [Source: Gallup 2016 Q12 Meta-Analysis: Ninth Edition].

The cumulative stock return (1998-2005) for S&P 500 companies is 45.6%. In comparison, the same data for Fortune’s 100 Best Companies to Work For is a staggering 200.6%. [Source: Russell Investment Group].

And staff engagement and rewards doesn’t have to be costly to get a return. As little as 1% of payroll spent on recognition programmes can yield an 85% improvement on engagement. [SHRM/Globoforce Employee Recognition Survey, 2012].


Smart companies achieve accelerated sales growth, have higher productivity, lower staff turnover and enjoy higher profits. And they keep their customers happier.

Smart companies are also more focused on engaging and rewarding their employees. If you want your company to be more successful, you need to reward your employees.

As we say in Allgo, life should be rewarding!


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