--- title: Why the ROI for Employee Recognition Programs is Mind-Blowing! description: Measuring the Return on Investment for Employee Recognition Programs image: https://blog.guusto.com/hubfs/Blog%20%238.png --- [![](https://assets-global.website-files.com/6171ef4f216b6c6bb23431cf/6323a45b21e499ca8e4f83fe_Group%203.svg)](https://guusto.com/) Platform [![](https://assets-global.website-files.com/6171ef4f216b6c6bb23431cf/6323a45b21e4998f4c4f83ff_how-it-works.svg) Employee Recognition](https://guusto.com/employee-recognition)[![](https://assets-global.website-files.com/6171ef4f216b6c6bb23431cf/6323a45b21e49941a44f8401_all-rewards.svg) Milestone Awards](https://guusto.com/milestones)[![](https://assets-global.website-files.com/6171ef4f216b6c6bb23431cf/6323a45b21e49941a44f8401_all-rewards.svg) Offline Recognition](https://guusto.com/offline-recognition)[![](https://assets-global.website-files.com/6171ef4f216b6c6bb23431cf/6323a45b21e49953d94f8400_social-impact.svg) Customer 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Measuring the Return on Investment (ROI), or quantifying the potential ROI, will solidify that it’s worth recognizing your people or help you build your case to management. This article will walk you through the calculations (you can also [try our ROI Calculator](https://www.guusto.com/roi-calculator.html)).   What is ROI? ROI is a way of measuring the value of an investment. For example, if you’re looking at different options to invest $1000 in, calculating the ROI will help you decide the best option. It is calculated as follows: **ROI** = Return / Investment **ROI** = (Additional Revenue + Cost Savings - Investment) / Investment Let’s take a closer look at the various components. Measuring Investment There are many great ways (beyond standard pay increases) to invest in showing employees appreciation for their contributions: 1. **Monetary recognition** - rewarding  performance, accomplishments, milestones or behaviours that aligns with company core values 2. **Non-monetary recognition** - handwritten letters, company announcements, or peer-to-peer programs that allow employees to nominate colleagues While building your recognition program, the biggest challenge is creating one that can be executed consistently across the entire organization, and keeping track of all the expenses. An employee recognition platform enables you to do both.  Let’s take an example: You have a company of 600 employees, invest 1% of employee salaries in rewards and spend $1.50/employee/month for a peer-peer nomination program: **Annual Investment** = Cost of Rewards + Platform Fees **Annual Investment** = 600 x 1% x $50,000 + 600 x $1.50 x 12 months  **Annual Investment** = **$310,800 ![rroi13](https://blog.guusto.com/hs-fs/hubfs/rroi13.jpg?width=600&name=rroi13.jpg)** Measuring Returns A more engaged workforce will align better with the company’s vision, which will provide a better brand experience for prospects and customers. While this does lead to increased revenue, this component is hard to measure. Therefore, we will focus the ROI calculations on the associated cost savings. A [Gallup study](https://www.gallup.com/workplace/260564/heard-quit-rate-win-war-talent.aspx) estimated that the cost of employee disengagement is $1 trillion a year in lost productivity in the U.S. alone. The study also showed that 26% of workers ranked recognition in the top three factors for staying in their job and about 20% pointed to a lack of recognition as the main reason they’d consider leaving for a new job. An effective recognition program can boost productivity, while reducing turnover, absenteeism and on-boarding costs. **Productivity** [Research](https://www.gallup.com/workplace/236927/employee-engagement-drives-growth.aspx) shows that companies with higher than average employee engagement levels benefit from 21% higher productivity. For the purpose of incorporating different scenarios, let’s be conservative and estimate that an effective employee recognition program can lead to 10% higher productivity (i.e. your people could produce 10% more, saving you from having to hire 10% more people to complete a job). **Total Productivity Gain** = # of Employees x Salary x Productivity Increase **Total Productivity Gain** = 600 x $50,000 x 10% **Total Productivity Gain = $3,000,000** **Turnover** High employee turnover is one of the largest costs to employers. It includes the cost of re-hiring, training, ramp-up periods, loss of expertise, and higher workloads for other employees while that position is vacant. Voluntary turnover is often due to a disengaged workforce, and in search of jobs that offer better pay, more challenging work, and with a better culture of recognition.  *The Bureau of Labor Statistics reports an average turnover rate of [44% annually](https://www.bls.gov/news.release/jolts.t16.htm) in the US, as well as an average turnover costs at 38% of the annual salary. This includes hiring, training, ramp-up, loss of expertise during time, higher workloads for other employees while position is vacant.* *[Besin by Deloitte research](https://www.forbes.com/sites/joshbersin/2012/06/13/new-research-unlocks-the-secret-of-employee-recognition/#4b43ba735276) found that companies that scored in the top 20% for building a “recognition-rich culture” had 31% lower turnover rates.* **Turnover Savings** = # of Employees Leaving x Cost of Losing Employee x Turnover Reduction  **Turnover Savings** = (# Employees x Turnover Rate) x (Salary x Turnover Cost ) x Turnover Reduction **Turnover Savings** = (600 x 44%) x ($50,000 x 38%) = 31% **Turnover Savings = $1,554,960** **Absenteeism** Absenteeism in the workplace is often caused by low morale and disengagement. A[survey](https://www.bls.gov/cps/cpsaat47.htm) by the US Department of Labour Statistics showed that employees are absent around 8 days a year. Creating a more engaged workforce can lead to reduced absenteeism and reduces costs related to lost productivity. **Absenteeism Savings** = # of Employees x (Salary / # of Work Days) x Reduced Days of Absenteeism **Absenteeism Savings** = 600 x (50,000/240) x 2 **Absenteeism Savings = $250,000** **On-boarding** On-boarding new hires is a time consuming and expensive process. According to a[survey by Korn Ferry](https://www.kornferry.com/press/korn-ferry-futurestep-survey-90-percent-of-executives-say-new-hire-retention-an-issue), 74% of executives believe that on-boarding is a key factor in retaining new hires. The survey also showed that 67% of the executives believed that including mentors in on-boarding could help new hires acclimate better, but half these companies did not have any mentorship programs in place. Having a mentor during on-boarding saves training time as well as improves new hire transition - this depends on commitments from older, highly engaged employees to create a welcoming environment. *On-boarding cost is the cost of lost productivity in a 60 working day on-boarding period, out of a 240 working day year. We estimate an engaged workforce can speed up on-boarding by 10%.* *The number of on-boarded employees include new employees through business growth (assumed to be 10% here) as well as from turnover (at 44%).* **On-boarding Savings** **=** On-boarding Cost x Savings % x # of On-Boarded Employees **On-boarding Savings =** (Training Period x Salary) Savings % x # Employees x (Growth + Turnover) **On-boarding Savings =** (60/240 x $50,000) x 10% x 600 (10% Growth + 44% Turnover) **On-boarding Savings = $405,000** **Total Cost Savings** **Total Cost Savings** = $3,000,000 + $1,554,960 + $250,000 + $405,000 **Total Cost Savings = $5,209,960** ![roi 14](https://blog.guusto.com/hs-fs/hubfs/roi%2014.jpg?width=600&name=roi%2014.jpg) It’s crazy Not To Invest in Recognition The total calculation results in the following: **ROI** = (Additional Revenue + Cost Savings - Investment) / Investment **ROI =** ($X + 5,209,960 - 310,800) / 310,800 **ROI = 1576% Per Year** This means that for every dollar invested in your employee recognition program, you see a $1,576 return. Not bad! Your people are your biggest asset. By creating an environment where they feel valued, employees will feel more engaged with their tasks and teams - which will lead to improved loyalty and retention, faster ramp-ups, lower absenteeism and higher productivity. It’s okay to start small and measure the success of your program along the way. Ad hoc programs, however, won’t do the trick - for your program to work, it needs to be executed consistently. To learn more, you may be interested in reading our blog on [how to build an impactful recognition program](https://guusto.com/building-an-impactful-employee-recognition-program). Ready to try it yourself? [Click here](https://www.guusto.com/roi-calculator.html) to enter your own values in our ROI calculator. Wondering how you can implement a recognition program and get an ROI that high? Hit the button below to chat with us, and we'll show you just how. [![Book a Time to Chat](https://no-cache.hubspot.com/cta/default/1872127/e91dac92-2f96-4c9a-ba50-63ff533ae97f.png)](https://cta-redirect.hubspot.com/cta/redirect/1872127/e91dac92-2f96-4c9a-ba50-63ff533ae97f) ## What's Next? Your employees are often focusing on day-to-day, short term projects and deadlines which can become unfulfilling, causing your business to suffer. So, next week we’ll be exploring - [**How to get your Employees Thinking Big Picture**](https://blog.guusto.com/how-to-get-employees-thinking-big-picture). It will cover the following in detail: - The benefits of getting employees thinking big picture - 5 ways to get your employees thinking big picture Hope you’ll join us for the discussion. Have something you want to learn more about? Let me know in the comments below or connect with me on LinkedIn. Muucho Guusto, Abbas :) ### Culture is the Ultimate Advantage Set yourself apart using the power of company culture. Stand out to new applicants and motivate your team to do their best work. ![](https://blog.guusto.com/hubfs/culture-guide.svg) ![Abbas Kherodawala](https://blog.guusto.com/hs-fs/hubfs/abbas-kherodawala-square.png?width=250&height=250&name=abbas-kherodawala-square.png) ### Written by [Abbas Kherodawala](https://blog.guusto.com/abbas-kherodawala) Abbas is a Customer Acquisition Specialist at Guusto and loves helping HR leaders find new ways to engage and interact with the modern workforce. Connect with me on [![linkedin logo](https://21757409.fs1.hubspotusercontent-na1.net/hubfs/21757409/linkedin-icon.svg)](https://www.linkedin.com/in/abbaskherodawala/) ### Related posts [Employee Engagement](https://blog.guusto.com/tag/employee-engagement) ### [Scalability is the Secret Weapon Behind Recognition Programs That Last](https://blog.guusto.com/scalability-is-the-secret-weapon-for-recognition) June 23 2026 [Skai Dalziel](https://blog.guusto.com/author/skai-dalziel) [Employee Engagement](https://blog.guusto.com/tag/employee-engagement) ### [25 HR Leaders, Recruiters & People Experts Worth Following Right Now](https://blog.guusto.com/best-hr-leaders-to-follow) May 13 2026 [Skai Dalziel](https://blog.guusto.com/author/skai-dalziel) Receive updates on new blogs with strategies for employee recruitment, engagement and retention. #### Guusto [About](https://guusto.com/about.html) [Careers](https://guusto.com/careers.html) [Social Impact](https://guusto.com/social-impact.html) [Terms](https://guusto.com/terms.html) [Privacy](https://guusto.com/privacy.html) [Our Awards](https://guusto.com/awards-and-recognition.html) [Security Practices](https://security.guusto.com/) #### Product [Employee Recognition](https://guusto.com/employee-recognition.html) [Customer Rewards & Incentives](https://guusto.com/customer-rewards.html) [Pricing](https://guusto.com/pricing.html) [How it Works](https://guusto.com/how-it-works.html) [All Rewards](https://guusto.com/rewards.html) [Employee Gift Card Options](https://guusto.com/employee-gift-cards.html) [Customer Stories](https://guusto.com/customer-stories.html) [Integrations](https://guusto.com/integrations.html) #### Learn [Blog](https://blog.guusto.com) [Webinars](https://webinars.guusto.com) [Employee Recognition Guide](https://guusto.com/building-an-impactful-employee-recognition-program.html) [Boosting Morale Remotely](https://blog.guusto.com/ultimate-guide-to-boosting-morale-remotely) #### Popular Posts [2026 HR Calendar](https://blog.guusto.com/2026-hr-calendar) [Word of Recognition](https://blog.guusto.com/50-words-of-recognition-for-your-employees) [Employee Recognition Metrics](https://blog.guusto.com/employee-recognition-metrics-to-measure-success) [Recognition Letter Templates](https://blog.guusto.com/9-sample-employee-recognition-letters) #### Help [Help Centre](https://help.guusto.com) [Contact Us](https://guusto.com/contact.html) [Book Demo](https://guusto.com/demo.html) [Sign up for FREE](https://auth.guusto.com/signin/register) [![Download on the App Store button](https://blog.guusto.com/hubfs/raw_assets/public/guusto-theme/images/download-on-the-app-store.svg)](https://apps.apple.com/us/app/guusto/id779932614) [![Download on the Google Play store button](https://blog.guusto.com/hubfs/raw_assets/public/guusto-theme/images/get-it-on-google-play.svg)](https://play.google.com/store/apps/details?id=com.guusto.guusto) Guusto acknowledges that we were founded on (and many members of our team continue to work on) the unceded territories of the xʷməθkʷəy̓əm (Musqueam), Sḵwx̱wú7mesh (Squamish), and Sel̓íl̓witulh (Tsleil-Waututh) Nations. [Click here to learn more about this.](https://blog.guusto.com/land-acknowledgement.html) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Abbas Kherodawala", "url" : "https://blog.guusto.com/author/abbas-kherodawala" }, "dateModified" : "2021-09-17T19:14:53.619Z", "datePublished" : "2020-03-04T12:00:00.000Z", "headline" : "Why the ROI for Employee Recognition Programs is Mind-Blowing!", "image" : [ "https://blog.guusto.com/hubfs/Blog%20%238.png" ], "mainEntityOfPage" : { "@id" : "https://blog.guusto.com/why-the-roi-for-employee-recognition-programs-is-mind-blowing", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.guusto.com/hubfs/GuustoLogo-Horizontal.png" }, "name" : "Guusto" } } ```