And so it turns out that employees are more likely to stay with a company if they feel that their efforts are recognized and appreciated. This was of course true during economic boom times, where employees felt they had other options, and competition for employee talent was fierce.

But it is still true today, even in a weaker economy. No matter how bad the economy gets, your best employees will still have options. In the absence of any kind of employee recognition program at all, it is precisely your best employees who are therefore most likely to jump ship.

First: Listen

Many times, senior executives are insulated from changes in employee morale. This is particularly true following the announcement of a major acquisition or ownership change, or the announcement of a change in strategy. The first step is to have a strategy for the senior management of the company to become attuned to what’s going on in the rank and file – without the filtering effect of middle managers who may simply be telling executives what they want to hear.

Watson Wyatt has created a tool for this purpose, called Active Listening, but that is one tool among many.

Return on Investment

Employee recognition is more than giving out cash bonuses and pay raises. In some cases, a small investment can pay large dividends. According to information from the Society for Human Resource Management (SHRM), 63 percent of organizations that start a formal employee recognition program reported increases in productivity, 61 percent believed employee engagement was significantly improved, and 58 percent believed they became more profitable as a result of their employee recognition initiatives.

Best Practices

It would be nice to say that cash doesn’t count, but it does. Good pay, pay raises, bonuses, and the realistic prospect of advancement is still the cornerstone of employee compensation. But employees also want their company to be competitive as well – because they know that their long-term success is ultimately tied to their employer’s competitiveness.

So do your best to reward employees in cash, of course. But think beyond cash – there are lots of tools at your disposal:

• Paid time off
• Certificates of Appreciation
• A premium parking space
• Gift certificates (area restaurants and stores may be happy to give a discount for inclusion in your employee recognition program)
• Use of a company car
• Increased expense allowance
• Spa treatments/massages
• Employee of the month plaques and certificates
• Recognition in the company newsletter
• Lunch with the boss
• Better or bigger office, view or computer
• More flexible schedule
• Safe driving awards
• Attendance awards
• Recognition by the CEO at a company meeting

The list is endless, while many of these initiatives cost very little. Bob Nelson wrote a book called 1001 Ways to Reward Employees, so there’s a good start for any manager looking to boost employee morale and engagement. It can be really simple too, just letting someone know they’re doing a good job can really make someone’s day.

Benefits of an employee recognition program include reduced turnover, less time recruiting, interviewing and training new employees, improved institutional memory, more solid relationships with key customers because of the consistent personnel, greater efficiency, fewer lost clients and customers because of new employee snafus, and fewer opportunities for the employer to lose key relationships because the key employee took their contacts to a competitor.

The bottom line:

Money and resources that you commit to your employee recognition program would most likely be lost anyway – to competitors or to bonusing new people, or in increased man-hours allocated to HR and middle management screening, or bringing on and training new people to replace the experienced ones who went out the door.