Employee engagement has become an increasingly important focus for executives in recent years. Current global circumstances amplify its relevance since a significant portion of the workforce has already transitioned or is currently shifting to or away from remote work.

This begs the question, “Why does engagement matter?” 

The data is telling:

• Only 31% of the workforce is engaged in their work.
• Disengaged employees cost $8.8 trillion globally.
• Companies with high employee engagement see an 18% boost in productivity and a 23% increase in profitability.

Engaged workers are happier, more productive, and deliver higher-quality work. However, from the data, 69% of the workforce is disengaged. 

As leaders, we have an opportunity (and a responsibility) to do better. The numbers make that clear. Your people are the fuel that keeps your company’s engine running—and they deserve to show up each day with a true sense of purpose and value in their roles. 

When leaders prioritize engagement, employees are empowered to contribute more meaningfully, which in turn drives greater success for the entire organization.

Let’s take a closer look at how we can make a real difference.

Leaders Directly Influence Employee Engagement

Leaders have an incredible impact on helping employees engage in their work. Gallup reports that managers account for “70% of the variance” in team engagement scores (this is the case if executive leaders are committed to and execute initiatives to help managers adopt an engagement mindset).

With good leadership, employee engagement can become a potent source of strength rather than an insidious cause for worry. How exactly do leaders influence engagement? By clearly and regularly communicating how much their employees are valued, and there’s no better way to communicate that value than through recognition. 

Studies found: 

• Those who do not feel they are recognized enough or properly “are twice as likely to say they'll quit in the next year.”
• The most meaningful recognition typically comes from an employee’s direct manager (28%), followed by senior leaders or the CEO (24%), the manager’s manager (12%), customers (10%), and peers (9%).

Recognition conveys value and can be as simple as saying, “Hey, good job on that project. You worked hard and did a spectacular job.”

Such a statement of encouragement means the most coming from a leader. Recognition and encouragement from management conveys value to the recipient in powerful ways. It’s saying, “I see you, and see the work you’ve been doing, and it’s been great. You have my trust, and the trust of the company.”

The Results of Feeling Trusted and Valued at Work

The Harvard Business Review found that feeling trusted and valued at work had several correlated positive outcomes.

When employees feel valued, they tend to be more satisfied, creative, and willing to take positive risks that benefit the organization, says Isaac Prilleltensky, PhD, a psychologist at the University of Miami.

Moreover, one key element in nurturing a high-value culture is recognition. Offering specific praise communicates a job well done and encourages others to do the same.

Frequent Recognition Conveys Value and Builds Trust

As leaders provide praise and recognition, something special happens in the brain of both the giver and the recipient.

Here’s the science: the process of giving and receiving compliments releases a chemical in the brain called Oxytocin.

Oxytocin reduces stress on a physiological level, often producing feelings of joy, fulfillment, and happiness. Research shows that when people receive these words of affirmation, both the person recognizing and the recipient see a boost in oxytocin in the brain.

Powerful Recognition = Powerful Productivity

A boost in joy and fulfillment will lead to increased performance, more energy, less stress, and increased productivity at work. 

In fact, research on trust and value in the workplace states that companies with higher trust indexes had higher total returns to shareholders. Leaders can enhance all of these effects by increasing the frequency of giving meaningful recognition to their people and utilizing the best practices of recognition. 

Best Practices of Recognition

Timely

Recognition for a project completed weeks ago is not as effective as recognition given in a timely manner, or even in the moment.

Appropriate

Consider the person you are recognizing and what you are recognizing them for.

Some employees may not wish to be publicly recognized, but will still appreciate a sincere private recognition.

Specific

Recognition that includes what project was completed, by whom, how it impacted the organization, and what specific efforts were made by the employee will be much more effective than generalized recognitions.

Personal

Knowing what your people value is an important step to taking recognition to the next level. Do they prefer public recognition or private encouragement? Do they want extra PTO as a reward, or would they prefer the chance to select their reward?

Genuine

As much as possible, be genuine in your praise. Know your team and know what would mean most to them, and be your genuine self.

Impactful

Determining how often to recognize is important, as well as considering the impact it may have. Does the achievement warrant a larger, company-wide recognition, or perhaps something smaller?

Influencing the Bottom Line

If all this information isn’t enough, let’s look at a specific example. The national average for annual revenue contribution per employee is $561,152 for top-performing organizations. High-trust organizations generally have a 50% increase in productivity. 

Assuming that productivity gains translate proportionally to revenue contribution, this would result in an additional $280,576 per employee annually.

Investing in improving the manager-to-employee relationship via powerful rewards and recognition can have a massive impact on trust and communicated value. This, in turn, provides higher financial returns to the organization as a whole.

Economic Impact of Employee Recognition

The Verdict: Leaders Directly Influence ROI through Recognizing Their People

We’ve painted quite a picture here—one of leaders directly influencing the bottom line

of every company by simply recognizing their employees’ contributions regularly.

Recognition is the most powerful way to increase engagement and is most impactful when it comes from leaders in the company.

Recognizing people for their work and communicating how valued they are is the most cost-effective and powerful way to boost your company culture, engagement, and

bottom line. Period.

Let’s talk about how to positively impact your business with recognition.

Schedule a demo.

Go to awardco.com/demo.