Consider that employee turnover costs U.S. companies $1 trillion each year (yes, that’s ‘trillion’ with a ‘T’). Meanwhile, disengaged employees cost over $500 billion a year.
Then consider studies that show that regular employee recognition efforts lead to a 41% increase in retention with 34% more engagement.
Given these numbers, it’s clear that your question shouldn’t be ‘can we afford to implement an internal rewards and recognition program?’ It should be ‘can we afford not to?’
Thankfully, with the right tools and strategies in place, employee engagement can be simple and cost-effective. This is true whether you’re managing employees in a small company with a small budget, or looking to keep thousands of workers (even remote ones) happy and engaged.
Keep reading to discover actionable tips to improve your employee engagement at different budget levels, ranging from small to large.
Before we explore how to optimize your budget for employee engagement, let’s briefly cover how much every company should be setting aside for employee engagement in the first place.
Like you’d expect, there’s no simple answer here. The amount you should spend on employee engagement depends on a variety of factors, like company size, industry, budgets, and whether you have specific goals for engagement initiatives.
That said, there are some general guidelines and best practices when determining an appropriate budget.
First, many companies will allocate a certain percentage of their payroll budget to employee engagement–somewhere between 1% to 2% is often considered a good starting point.
Another common approach is to budget on a ‘per employee’ basis, which can range anywhere from $100 to $1000.
Of course, these numbers will vary from industry to industry, which is why it’s a good idea to research what similar companies in your sector spend.
And it’s why it’s also a good idea to keep the focus on return on investment (ROI).
Remember that employee engagement efforts should have specific goals, like higher productivity, lower turnover, or more customer satisfaction.
So always keep your unique ROI in mind when determining your engagement budget, and then track results to see if your efforts are paying off as hoped.
Engagement needs can change over time. What works one year might not be as effective the next.
HR professionals should therefore be prepared to adjust their spending based on feedback and the evolving needs of their workforce. Effective employee engagement surveys should be a part of this process.
Regardless of your employee engagement budget, you’ll want the bulk of your spending to go to your employees themselves–and not to the software you’re using to manage them.
That’s why more and more companies are choosing to engage and recognize their workers with digital rewards software. Digital gift cards can be sent immediately, so that employees are rewarded immediately (and without having to worry about gift wrap or mailing addresses).
Plus, Giftbit’s flexible pricing lets you spend every cent of your budget on your program (and your employees!).
This is how Factors Group, a Canadian company specializing in nutritional supplements and vitamins, streamlined their rewards and incentives program.
“We like to provide rewards and incentives to our employees for many different reasons throughout the year. Previously we used physical gift cards, but it was cumbersome and time-consuming,” says Theresa Streifel, Supervisor of Reception & Administrative Services at Factors Group.
“Giftbit has given us the ability to administer digital gift rewards to all of our employees across Canada.”
First, if you’re working with a small budget, remember that rewards don’t have to be expensive to be effective. Even $5 to Starbucks can go a long way.
That said, if there just isn’t room in the budget for a personalized employee recognition program, then you might want to consider a points-to-rewards program model instead. With this type of program, employees collect points over time, which they can eventually redeem for digital rewards.
In this model, instead of automatic triggers for rewards, employees instead will earn points for different activities or accomplishments. This can be as simple as arriving on time (or maybe opting to come into the office for your hybrid employees), or as business-critical as meeting sales goals or getting reviews.
Trying to also boost culture? Let employees pool their points, or reward them for collaboration activities (more on how to improve culture below).
Letting employees reward each other with points is also a popular practice. When people say "thank you" with points, it builds stronger teams.
With this model, you can spend as little as $50 a month on gift cards for the employees who collect enough points–all while engaging your employees and rewarding them, too.
Then keep your costs low by also using incentives like extra paid time off (PTO), flexible work hours for a day, or even a prime parking spot. Get creative, give out just a few bigger rewards each month, and remember that even something as simply as public recognition can lead to a better workplace.