According to a recent study conducted by Advantage Club, providing monetary rewards to employees can significantly reduce attrition rates. Employees who received monetary incentives had an attrition level of just 5% in 2022, compared to an average rate of 16% across all companies covered in the study.
Advantage Club, a global employee engagement platform, conducted a comprehensive study revealing insights on the impact of reward & recognition on attrition in India in 2022. The report analysed rewarding behaviours in over 100 companies that covered one million employees.
As per the report, attrition in employees who are not given any kind of reward stands at 38%. However, attrition in employees who receive monetary rewards comes down to 5%, an 87% reduction. Additionally, attrition in employees who receive non-monetary rewards stood at 11%.
The report highlighted and provided evidence of how a robust R&R strategy with monetary and non-monetary rewards can effectively reduce attrition. The study found that employees were more likely to remain in their current jobs that offered performance-based monetary rewards.
Also read: How pay transparency can impact the work culture of an organization
Speaking on the report’s findings, Sourabh Deorah, Co-Founder & CEO, Advantage Club said, “The study highlights the importance of recognizing and rewarding employee performance, particularly with monetary incentives, to foster a work culture of engagement and loyalty. Organizations can reduce attrition, boost employee morale and productivity by investing in rewards and recognition programs.”
The study captured and compared the level of attrition in different cohorts of employees. It compared the level of attrition in employees who did not receive any reward with people who received some kind of reward or recognition from their employers. The study further analysed and compared attrition in employees who receive monetary rewards, non-monetary rewards and a combination of both. The results have presented some insightful data points for HR leaders and professionals.
Key Highlights
● Employees who received monetary rewards had a 5% attrition rate, while those who received non-monetary rewards had an 11% attrition rate.
● The overall average attrition across companies and industries stood at 16%. Employees who received no reward had a 38% attrition rate.
● Companies spend about 2-5% of total payroll on R&R and mostly have four types of rewards: Day-to-Day, Formal, Informal and Approval Based.
● As compared to attrition in employees who receive no reward, monetary rewards can reduce attrition by 87%, while non-monetary rewards can reduce attrition by 71%.
● The highest overall attrition level was in the Business Process Outsourcing (BPO) sector (40%) and the lowest in logistics (4%)
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