For many workers in the UK, the cost-of-living crisis is top of mind – even more so now, as winter approaches and substantially higher energy bills are forecasted. In fact, a recent Greater London Authority report reveals that 90% of Londoners say their household costs have risen over the last six months, with evidence suggesting that some prices in London are rising faster than across the wider UK. It comes as no surprise then, that employee financial well-being is a key consideration for business leaders as we head into 2023.
Likewise, a recent study conducted by Gallup and Workhuman identifies financial well-being – people’s economic stability and standard of living – as one of the five essential elements of employee well-being. The complete list includes:
- Financial well-being – whether people have the funds they need to provide for themselves and their family
- Career well-being – how people spend their days and whether they generally like what they do with their time professionally
- Social well-being – people’s relationships with others and whether they have meaningful connections and positive interactions with others
- Physical well-being – people’s health and physical condition and whether they have the energy and endurance to be productive each day
- Community well-being – people’s daily environment and whether they feel satisfied, connected and engaged in the circles in which they live and work
Today’s organisations understand that supporting employees’ overall well-being is not only the right thing to do, but also strongly connected to a company’s overall growth and success. Gallup’s research shows that the cost of employees leaving their jobs due to burnout alone is up to 20% of the annual payroll, which amounts to hundreds of millions of pounds lost each year.
Failing to protect and promote well-being is one of the costliest mistakes organisations can make. But in these challenging times, beyond cost-of-living adjustments, what can companies do to make a real impact on employee wellbeing?
Recognition as a driver of well-being
One of the most effective, but often under-utilised, well-being strategies is employee recognition. Gallup’s recent research shows that acknowledging and expressing appreciation for an employee’s contributions can enhance multiple aspects of well-being and act as a buffer against job stress.
Now, everyone knows and understands that workplace stress does indeed exist; it’s a topic that’s heavily covered in the news and even by content creators. In fact, back in the 1990s and early 2000s, there was a heavy push for employees to have stress balls at their desks and cubicles because it was meant to relieve temporary stress and tensions they would have to deal with during work hours. So, there’s no doubt about it that everyone, business owners and management included, understands that this is truly a problem and that workplace stress is far too common.
When employees strongly agree that recognition is an important part of their culture, they are up to 91% more likely to be thriving in their lives. As well, employees who have high-quality recognition experiences are as much as 10 times as likely to strongly agree that they belong.
Gallup’s large-scale study of more than 12,000 employees across 12 countries reveals that employee recognition is associated with better employee well-being across four key dimensions:
- Employees are as much as two times as likely to evaluate their lives and futures positively
- Reduced levels of burnout – employees are up to 90% less likely to report being burned out at work “always” or “very often”
- Improved daily emotions – employees are 40% less likely to report having experienced a lot of stress, worry and sadness.
- Better social well-being – employees are seven times as likely to strongly agree that they have meaningful connections or a best friend at work
Consequently, when implemented effectively, a culture of recognition can be a key driver of employee well-being.
Recognition and well-being – Room to improve
When it comes to how much and how effectively recognition is expressed in workplaces globally, the good news is that the research shows the UK is tied for first with Norway, followed in second place by Germany, and Denmark in third, per Gallup.
The not-so-good news is that even as a global frontrunner, only 24% of UK respondents reported that at least three of the five elements needed for effective recognition (authentic, personalised, equitably distributed, embedded in culture, and fulfilling) were fully fulfilled.
This leaves considerable room for improvement when it comes to recognition practices. Most organisations are not maximising the impact of employee recognition at work and are missing out on opportunities to improve employee engagement, commitment and culture.
Impactful recognition takes more than good intentions or tick-box initiatives. It’s crucial for companies to take stock and evaluate whether the way they recognise their employees is truly creating value or needs further investment and reworking to realise its strategic benefits.
ROI of Recognition
The cost of neglecting well-being is quantifiable and substantial. For every 10,000 workers, there is $20 million (£18M) of opportunity loss due to low well-being and its drain on performance, according to Gallup. This equates to a whopping $322 billion (£291B) global cost in employee turnover and lost productivity due to burnout.
On the flip side, employees with high well-being lead happier, more fulfilled lives and perform better at the office. Simply put, people who feel their best, do their best, taking fewer sick days and having fewer safety incidents as a result. They are also more engaged and less likely to be burned out or leave their jobs.
Companies that fully incorporate recognition into their culture can drastically improve employees’ perceptions that they’re valued, cared for and respected as humans. These effects translate into clear ROI, but to achieve those outcomes, organisations must strategically invest in and then scale recognition thoughtfully to change the culture of their workplaces and make a real difference on well-being.
Conclusion
Organisations understand that employee well-being is more important than ever, yet many are not making use of one of the most effectual and accessible well-being strategies available to them – employee recognition. Gallup’s recent research proves definitively that recognition, when properly implemented, boosts the well-being of employees and creates a work environment where people thrive. In today’s work landscape, employee recognition is something business leaders can’t afford to ignore.
