Turnover Rate: The Hidden Signal Calling for Employee Recognition

High turnover rates are an ongoing issue for companies. Understanding why employees quit can help reinvigorate your business and help it thrive.

Indeed, 79% of employees stated they would leave their job if they didn’t feel appreciated. This demonstrates the vital relationship between recognition and retention.

Good retention rates translate into higher productivity and profitability levels. This means they should be a priority for companies who want to succeed.

In this article, we’ll discover more about the link between turnover rate and employee recognition. We’ll also offer strategies to help you boost your business and retain your workforce.

Understanding the Link Between Turnover Rate and Employee Recognition

There’s a striking relationship between recognition and retention.

A recent Gallup report revealed that workers engaged at work are 87% less likely to quit.

Managers who fall in the top 10% for offering recognition are more likely to have employees who are loyal to the organization.

Recognizing and appreciating employees is also cited in research as a key retention strategy.

What Is Turnover Rate?

Turnover rate is the percentage of employees who leave an organization within a set time period, usually a year.

The latest Mercer surveys say that in Canada, the average turnover rate is 11.9%. In the United States, it’s 13.5%.

In Canada, industries with above-average rates include retail and wholesale. And the sector with the lowest turnover rate is energy.

Why It Matters?

High turnover can be costly. The total cost of an employee quitting can be 100 to 150% of their annual salary.

But the impact goes beyond just the financial cost. Here’s why high turnover is a serious challenge:

• Recruiting and hiring replacements is both expensive and time-consuming.
• Your company’s reputation may suffer, making it harder to attract top talent.
• Productivity takes a hit—not just while the role remains vacant, but even before, as disengaged employees gradually withdraw from their responsibilities.
• Team morale declines, affecting overall workplace culture and performance.
• Customer satisfaction may drop if experienced employees leave, disrupting service quality and client relationships.

Understanding why talent is leaving your organization is your first step to improving retention rates. Once you have this knowledge, you can put in place recognition and other strategies to help build a strong company culture and improve retention.

The Role of Recognition in Reducing Turnover

Recognition plays a critical role in reducing turnover. Surveys show that lack of recognition can be a top reason for employees to quit.

Google is one example of a company that has focused on engagement and recognition to boost its retention rates. Using strategies such as offering safe spaces for employees to express themselves and work-life balance policies, it has achieved a retention score of “A”, as rated by its employees. To date, 57% of employees who responded to a survey indicated that they would decline another job offer, even if it came with a higher salary.

Signs That Turnover Is Linked to a Lack of Employee Recognition

Lack of recognition is one of the most frequent reasons why people leave employment.

Here are some signs that suggest your employees feel unrecognized:

Limited Peer-to-Peer Recognition

Peer recognition is a powerful way to enhance workplace positivity, leading to greater employee engagement and retention. When employees rarely acknowledge each other’s contributions, it may indicate a lack of a recognition culture. When appreciation is missing, employees can feel undervalued, leading to disengagement and ultimately higher turnover rates.

Altrum’s peer recognition solution allows employees to acknowledge their peers. One of its features, an appreciation wall that works like a social media feed, fosters a sense of belonging, and helps to reduce high turnover.

Decline in Engagement Among Employees

Employment engagement has reached its lowest level in the past decade. The latest data says only 31% of employees are engaged at work.

And when engagement declines, the risk of losing staff increases. That’s why it’s important to identify the signs of disengagement, which can include:

• Lack of creativity, problem-solving and innovation
• Little interest in professional development or learning
• Lateness and disregard for deadlines
• Low participation in team activities

To help you diagnose disengagement, use surveys, performance reviews and informal meetings.

Fortunately, there are many ways you can boost employee engagement, including

• Promoting work-life balance by offering flexible working and regular breaks
• Communicating clearly with employees and making your conversations two-way
• Offering growth opportunities through promotion or training
• Using an employee recognition platform to celebrate employees’ achievements and offer rewards

Decrease in Quality of Work

A lack of recognition can be linked to a decrease in the quality of an employee’s work. Managers may notice signs such as missed deadlines or careless errors.

Studies show that when employees are recognized and rewarded, they are more likely to show positive behaviour. As a result, employees are better motivated and productivity increases.

Simple solutions like providing regular feedback and offering incentives can be your first step towards high-quality work and building a more positive workforce.

High Absenteeism Rate

When employees feel undervalued or disengaged, they are more likely to take frequent absences. This can be a sign that they don’t feel recognized for their contributions or that their role isn’t meeting their expectations.

Implementing recognition-focused initiatives can help address this issue by boosting motivation and engagement. According to Gallup, recognition initiatives can help reduce absenteeism rates by 27%. Simple yet effective strategies include flexible work arrangements and structured recognition programs that acknowledge employee efforts in a meaningful way.

Employee Recognition Strategies to Reduce Turnover

Tried-and-tested recognition strategies can help reduce dissatisfaction and absenteeism while fostering a more positive work experience.

Cisco’s recognition program Connected Cisco has helped to create a positive work culture and improve retention rates. A survey found that 65% of its employees have been with the company for five years or more.

Other strategies to reduce turnover include:

• Creating a tailored recognition strategy for your industry
• Training to help managers use recognition in their everyday interactions with employees
• Peer-to-peer solutions to enable colleagues and managers to recognize and value one another via a virtual wall or feed

Tailor Your Approach to Your Industry

To maximize the impact of your recognition efforts, it’s essential to tailor your approach to fit the unique needs of your industry.

For example, if your teams work in a remote environment, peer-to-peer recognition platforms can be highly effective in maintaining engagement and connection.

Or you might choose a system that offers incentives that are relevant to your industry. For example, if you work in hospitality, employees can work towards a hotel stay or meal voucher.

This approach ensures your strategies are not only relevant but also meaningful to your team’s specific context.

Integrate Social Recognition into Everyday Work Life

By allowing employees to actively express their appreciation for their colleagues, social recognition becomes a powerful lever for boosting morale and engagement.

Google’s gThanks program is a great example of a successful peer-to-peer recognition program. After implementation, 61% of employees said that they felt acknowledged. And 85% reported that their workplace was positive.

Get Your Managers Involved

Managers play a crucial role in employee engagement and turnover reduction. However, only 14% of organizations provide their managers with the necessary tools for rewards and recognition. Additionally, 53% of employees would like to receive more recognition from their immediate manager. When managers fail to practise recognition, their employees are more likely to quit.

Managers can show recognition by:

• Celebrating work milestones
• Acknowledging achievements in team meetings
• Facilitating professional development to help employees grow

Training courses like Altrum’s Orange Program can also help managers understand recognition and how to practise it daily.

Turn Employee Feedback into Actionable Recognition

You can use employee feedback to improve recognition strategies and ensure they are meaningful, inclusive and effective.

Being heard boost employee morale and ensures that recognition programs reflect their needs. These actions create a positive, inclusive and loyal work culture.

Research shows that collaborative feedback motivates and inspires, particularly when managers and employees work together to develop new opportunities and solutions for employees, boosting future performance.

Integrate Recognition into a Comprehensive Employee Retention Strategy

While recognition plays a crucial role in boosting retention and loyalty, it’s just one piece of a larger employee retention strategy. A holistic approach that includes professional development, work-life balance, and strong leadership is essential for creating a thriving workplace.

As demonstrated by companies like Cisco and Google, employee recognition programs contribute to a positive, inclusive environment that encourages long-term engagement.

By incorporating flexible recognition solutions like Altrum’s, which supports both manager-to-employee and peer-to-peer recognition, you can make employees feel valued. Combined with other retention strategies, this helps reduce turnover rates, increase productivity, boost engagement, and foster a stronger company culture.