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The Employee Recognition and Rewards Buyer’s Guide: How to Choose the Right Tool for Your Business

August 4, 2025

Erika Rahman

How to gain leadership buy-in, work within tight budgets, and prove ROI.

Introduction

The importance of employee recognition and rewards.

When employees feel heard and understood, they’re 4.6x more likely to perform their best work.

Purpose of the Business Case

Despite how critical recognition programs are to employee engagement, retention, and productivity, too many businesses fail to see their importance. While 70% of employees believe their employers care about recognition programs, only 34% of employees say their company has a recognition program, highlighting a serious disconnect.

Understanding the Impact of Employee Recognition

Consistent Recognition Powers Employee Productivity

A great way to improve company culture and connect employees to your mission and vision? Connect your recognition program to your company. Encourage leaders and peers to highlight and recognize employees that emulate your company values. You’ll see a greater connection between your workforce and your company’s overall vision.

Highly engaged employees are 21% more productive than those with low engagement.

Employees Who Feel Valued Stay Longer

High employee turnover also impacts your reputation to hire top talent in the future. It’s critical to consider the future losses your business might face if you struggle with retention issues that could easily be fixed with recognition.

More than 90% of HR professionals report that employee recognition programs positively impact employee retention.

Recognition Helps Drive Business Growth

Demonstrating ROI

Financial Benefits of Recognition Programs

Total Employees

Average Turnover

Total Revenue

Average Revenue Contribution

Average Employee Salary

150

13.5%

$25,000,000

$200,000

$50,000

Cost of Turnover (33%)

Cost of Absenteeism ($2,945)

Total Lost Costs

$334,125

$444,750

$1,384,125

Cost Savings with Improved Engagement

Cost Savings with Reduced Turnover

Cost Savings with Reduced Absenteeism

Total Cost Savings

Overall Cost Savings

$220,500

$167,063

$333,563

$721,125

$2,105,250

The recommended investment for an employee recognition program sits between 1-2% of total payroll costs. SHRM has recommended this number for nearly a decade with several reports showing that companies who invest this amount see the biggest return on their investment—increasing employee engagement, productivity, motivation, and more.

For businesses new to recognition programs with a tighter budget, the recommended investment can look like $5 - $20 per employee per month, or $60 - $240 per employee per year.

Total Employees

Average Turnover

Total Revenue

Average Revenue Contribution

Average Employee Salary

5,000

13.5%

$500,000,000

$150,000

$50,000

Cost of Disengagement (14%)

Cost of Turnover (33%)

Cost of Absenteeism ($2,945)

Total Lost Costs

$35,000,000

$11,137,500

$14,725,00

$46,137,500

Cost Savings with Improved Engagement

Cost Savings with Reduced Turnover

Cost Savings with Reduced Absenteeism

Total Cost Savings

Overall Cost Savings

$7,350,000

$5,568,750

$11,043,750

$23,962,500

$70,100,000

Cost Savings from Reduced Turnover

68% of HR professionals say that employee recognition significantly improves retention (and 56% say it helps with recruitment).

When employees feel like they belong at work, companies see an 84% increase in employees’ intent to stay vs. find a new job.

A Step-by-Step Guide to Earning Leadership Buy-In

Step 1: Position Recognition as the Solution to Company KPIs

Step 3: Put Together Your Presentation

Pro Tips for Building a Case For Recognition:

Consider this—in industries with high turnover, such as retail and hospitality, recognition programs help businesses retain skilled workers and provide better customer service. Forbes highlighted this recognition benefit, noting that when employees feel happier and more engaged, they’re more likely to provide better customer service and represent the business in a positive way, which then increases customer satisfaction and even loyalty.

Implementing Recognition Programs on a Tight Budget

Cost-Effective Recognition Strategies

Leveraging Technology

One thing to note: If your business is already using an employee communication tool like Slack or Microsoft Teams, you can find an integration for instant recognition. These integrations make setting up your new recognition program easy for everyone—helping increase adoption across the business.

The Value of Digitizing Recognition

Automated rewards and workflows

Measured impact

Lowered costs

Encouraging Peer-to-Peer Recognition

Peer-to-peer recognition programs are 35.7% more likely to have a positive impact than manager only recognition.

Case Studies and Real-World Examples

Successful Implementation in Various Industries

Motivosity-Specific Case Studies

Blueberry Pediatrics

Employee Recognition Best Practices

Ideas for employee reward types:

Custom gifts—Employee of the Month, a specialized plaque, etc.

Company swag—branded sweatshirts, hats, or water bottles

Gift cards—favorite restaurants, retail stores, or airline

Dollars/Points—cash, money added to a debit card (like the ThanksMatters Card), Amazon gift cards, or points redeemable for gifts

Travel experiences—paid vacations, a wellness retreat, or a team getaway

Intangible rewards—a day of PTO, Fridays off in the summer, or no-meeting Fridays