This article originally appeared in Wall Street Journal.
If you’ve been on social media lately, you might have noticed job changes in your network skyrocketing. And if you, too, have recently changed jobs, consider yourself one of the many in what’s being called the Great Resignation, or the Great Talent Swap. The numbers speak for themselves: The U.S. Department of Labor reported 4.3 million people quit their jobs in August. That’s almost 3% of the entire workforce—the highest count on record.
It’s no wonder. A year and a half into the pandemic and workers are weary and stressed. I believe we’re only seeing the beginning of the fallout. What are employers to do? While compensation adjustments are certainly part of the equation, most companies don’t have the resources to continue pouring money into sign-on or retention bonuses. Not to mention, it does nothing to solve the burnout problem. It’s unsustainable.
So what is sustainable? Culture.
Investing in company culture not only gives your employer brand the much-needed edge to attract top talent, but it also reinforces a sense of connection between employees that is essential for engagement, productivity and retention.
The importance of a recognition program for culture
Employee recognition is the first step toward creating a more human, connected workplace. Think about it—saying “thank you” makes you vulnerable and authentic. It removes any headspace for cynicism. One company doing recognition especially well at scale is Merck, the global biopharmaceutical company.
Leaders at Merck see peer-to-peer recognition as an opportunity to dramatically improve employee experience. Using Workhuman® technology, the company launched the INSPIRE platform, where employees across 85 countries can give and receive messages of thanks along with varying levels of points that can be redeemed for gift cards and merchandise. Increasing the frequency with which employees are recognized in a meaningful way builds a positive energy that you simply don’t get from a spot bonus.
In my work helping hundreds of companies improve culture, I’ve seen that recognition works best when it’s based on a company’s core values and when everyone in the organization is invited to give and receive recognition. Merck excels here as well. INSPIRE has reached 100% participation across every country, with more than 2 million awards—genuine moments of human connection—given.
How recognition improves business bottom line
The connection between recognition and company culture is important from a finance perspective, too. According to Gallup, the cost of replacing an employee can be 50%-200% of their salary. Whether your turnover rate is 3% or 20%, that cost can do major damage to your bottom line. It’s much easier and more cost effective to retain the workforce you have than to bring on new talent, especially in today’s market.
There is a direct connection between a values-based, peer-to-peer recognition program like Merck’s and retention. In fact, at Merck, new hires recognized through INSPIRE are five times less likely to leave the organization in their first year. And for all Merck employees, receiving recognition once per month is related to 1.3 times lower turnover. Anything you can do to mitigate turnover is a step in the right direction, especially as new SEC rules drive human capital disclosures. And you can reap these benefits of recognition for pennies on the dollar.
Another added benefit of a widely used program like INSPIRE is its impact on key diversity, equity and inclusion (DE&I) metrics. At a foundational level, INSPIRE allows a more diverse group of employees to receive recognition. Two DE&I features are also embedded within INSPIRE. The first is called Inclusion Reflection, which nudges employees in the process of nominating a peer, asking questions like: Are you recognizing the right individuals? Are you recognizing individuals equitably?
The second feature is called Inclusion Advisor, a smart assistant that provides in-the-moment micro-coaching to mitigate unconscious bias and improve how employees communicate. Workhuman iQ research indicates as much as 20% to 30% of all written communication includes some form of unconscious bias. In an era where many companies are shifting to a remote or hybrid work model, that poses significant risk to employee engagement. And the data show these moments of micro-coaching work. At Merck, 75% of employees choose to change their recognition message after Inclusion Advisor flags potentially biased language. And employee surveys indicate these nudges are changing behavior in a positive way, even in settings beyond recognition.
Employers can’t afford to ignore the fallout from the Great Resignation. What you can do is arm your company with a foundation of goodwill and positivity. By committing to more frequent employee recognition, you can improve your culture, boost your bottom line and move the needle on DE&I.
Wall Street Journal Custom Content is a unit of The Wall Street Journal Advertising Department. The Wall Street Journal news organization was not involved in the creation of this content.