people talking about the true impact of reward systems
May 12, 2022

Facts about the true impact of reward systems on employee retention

Employee turnover is a costly business. Once you factor in the time and effort involved with recruiting and training new candidates, it’s no surprise that the average employee exit equates to 33% of their annual salary.

Employee turnover can also make it difficult to retain other valuable staff members, and the costs can have a significantly negative impact on a company’s performance. That’s why 47% of HR professionals say that retention and turnover is the top workforce management challenge and 81% of CEOs are choosing to concentrate their investment focus on talent.

How reward systems impact employee retention

Our own research into talent acquisition discovered that offering employee incentives is an effective way of acquiring and retaining new talent. This is especially true among the younger workforce (e.g. the 21-34 and 35-49 age groups) who see incentives as a necessary component of their employee compensation. OurReceiving Incentives and Rewards from Your Employerstudy also highlighted that receiving a reward from an employer would increase 84% of employees’ loyalty to a company.

These findings are backed by external research that shows that the giving of employee rewards and incentives can help reduce turnover and boost a company’s bottom line:

This leads us on to the next important piece of the employee retention puzzle: The most effective ways of recognising them.

How do you retain employees using a reward system?

Now that we’ve uncovered the direct correlation between reward systems and employee retention, let’s focus on the ways in which you can design and manage your employee recognition process to give your business a competitive edge.

The first thing to remember is that everyone is different.

It’s impossible to please all of the people all of the time and there is no one size fits all reward type. But by keeping in mind important factors such as employee feedback, staff demographics, and your business objectives, you should be able to keep the majority of your staff on-side.

Here are a few further pointers to consider:

1. Give employees a choice of reward

For employees, it’s more important to have a choice of rewards than any specific reward. With most workforces being a diverse range of demographics spanning multiple generations, it’s impossible to second-guess their preferred rewards.

Another thing to consider is that our research found that the majority of employees (85%) prefer individual incentives over group incentives.

That’s why many companies opt to show appreciation toward their employees with a wide selection of rewards that cater to multiple preferences such as gift cardseGifts, or an experience that they will never forget.

2. Reward your employees regularly

The issue with long-term rewards is that employees can lose interest in working towards them if it’s a drawn-out and arduous process. Instead, it’s best to recognise your employees with a steady flow of small but regular rewards.

Not only does this help boost your engagement with your people, but it acts as a regular reminder to your staff of the desired behaviours and actions that your company chooses to reward.

3. Offer your employees digital rewards

These impressive smartphone statistics all point to one thing: employees are ready to receive digital rewards such as eGifts.

In fact, our research shows that virtual rewards appeal to all age groups and employees actually prefer digital rewards to physical ones.

It’s easy to see the appeal of digital rewards. They’re an easy-to-use payment method that can be instantly delivered to any mobile device and then redeemed at a wide variety of leading retailers from anywhere. Plus, from an economical point of view, digital rewards are a low-cost alternative to physical rewards as there are no printing or postage costs.

4. Make your employee rewards personal

“When people are made to feel cared for, nurtured, and growing, that will serve the organisation well. Because those feelings drive commitment and loyalty just like it would in any relationship,” said Barbara Fredrickson, University of North Carolina psychology professor.

Employee engagement is a key factor in employee retainment. That’s why it’s important to treat your staff as individuals and take care of each one with considered, personalised employee rewards. This can help them feel valued and boost their commitment to your organisation.

For example, gift cards can be personalised with the employee’s name, a message of thanks, and your company branding so your people have a reminder of why they were recognised and will be committed to repeating that behaviour.

5. Make your employee rewards memorable

Research has shown that if employees recall the occasion of a reward more easily, they’ll associate the positive emotions they felt with work. That’s why gifts offering experiences, such as our Envy packages (that offer a range of over 5,000 real-life experiences) are ever-popular.

The science behind the effectiveness of experiences is that they engage multiple senses, which creates a memorable emotional reaction.

For the same reason, employees are more likely to remember rewards if they are presented ceremoniously or if they are a complete surprise, as unexpected events are easier to recall than regular daily routines.

How do reward systems affect the performance of an employee in the workplace?

The benefits of employee reward systems go far beyond having a positive impact on employee retention. Research has shown that they can also help to boost business performance, employee satisfaction, and much more. Let’s take a look.

Job satisfaction

Employee incentive programmes can help to make employees feel more valued by the organisation, which leads to a greater feeling of contentment. 80% of employees agree that employee rewards positively impact their job satisfaction and performance.

Sense of community

Letting your staff give or nominate their colleagues for an employee reward is a great way to increase engagement and create a positive communal team spirit. Four in five employees gain satisfaction from this type of peer-to-peer recognition.

Motivational boost

Our research shows that receiving gift card rewards motivates most employees to work harder as it helps to make staff feel valued. Plus, 71% of employees without company reward systems said that rewards are “likely or somewhat likely” to affect their motivation to perform better at their jobs.

Employee performance

Reward systems that use the right metrics (such as regularly rewarding employees with a memorable choice of reward) have been found to increase employee performance by up to 44%.


A study by the Brandon Hall Group found that companies that recognize their employees multiple times each month are more likely to see an increase in employee engagement.

This is an important finding as Gallup research into employee satisfaction uncovered links between employee engagement and a host of positive improvements across other business units including:

  • Customer metrics
  • Higher profitability, productivity, and quality
  • Less absenteeism and theft
  • Fewer safety accidents

The power of employee reward systems to boost employee engagement also extends to remote workers. When we asked remote workers how they wanted their employers to engage with them, the majority said via rewards and incentives.

As for what type of reward, 84% of them said that they prefer to receive their rewards in the form of prepaid and gift cards.

Need help to ensure your reward system impacts employee retention?

With 60% of UK workers planning to look for a new job in 2022 and over 70% of UK employees wanting their employers to make more effort to motivate them, there’s never been a better time to focus on your reward system.

As a global leader in on-demand rewards issuing over 50 million rewards and incentives each year, we’re perfectly placed to help ensure that your employee rewards meet your employees’ needs.

To discover the Blackhawk Network difference, get in touch today on 020 3948 7991.