The ROI of Employee Recognition

Employee recognition isn’t a checkbox. It’s the emotional heartbeat of your organization.  

In 2025, even after decades of shifts in the workplace, nothing has changed more than employees’ desire to feel seen, valued, and essential. HR leaders who build people-first cultures know that when recognition becomes part of the fabric—not just a quarterly event—it transforms performance, retention, and company spirit.

👉 You already know recognition is key. But maybe you need to help others in your organization understand the ROI of recognition. The best companies in the world recognize the power of people-first cultures and work environments where employee happiness matters as much as the bottom line.

So, here's why becoming a recognition-first organization makes good business sense.

The Strategic Power of Recognition: Real Numbers

The latest research shows that when employees feel genuinely appreciated, their motivation, loyalty, and productivity soar. Recognition is no longer a “soft” practice; it’s a data-backed driver of measurable business outcomes.  

For HR leaders looking to build cultures that thrive, the numbers make one thing clear: recognition is one of the smartest investments you can make.

1. Recognition increases motivation, productivity and engagement

• 24% of employees say the most memorable recognition comes from their manager or CEO

• 77.9% believe they'd be more productive if recognized more frequently  

• 81.9% agree that being recognized for their contributions improves their engagement  

2. Recognition keeps employees from leaving

• Companies with a “recognition-rich culture” see up to 31% lower voluntary turnover

• Employees who are recognized at least once a month are 33% more likely to say they are not job hunting

• For every 10% boost in recognition, one company (JetBlue) saw a 3% rise in retention rates  

3. Recognition impacts business outcomes

• 90% of HR professionals believe recognition programs boost business performance

• Global disengagement costs remain staggering—$8.8 trillion lost annually, highlighting the high stakes of ignoring engagement and recognition  

• In aligned recognition-rich environments, employees are 45% less likely to change organizations after two years

Recognition Culture Means Real ROI

Demonstrating the return on investment (ROI) of employee recognition to executives is crucial. Luckily, recognition has an undeniable impact on employee turnover and other key performance indicators. The costs associated with turnover, absenteeism, and disengagement have a significant financial impact on organizations.

We’ve developed a calculation that allows you to easily quantify the ROI of recognition. The calculation shows a substantial return on investment, emphasizing the effectiveness of recognition in creating a strong culture and fostering employee engagement.

Calculate the ROI of recognition:

ROI = [Savings from Reduced Employee Turnover – Cost of Program] /Cost of Program

Savings from Reduced Employee Turnover = [Cost to Replace Employee+ Cost to Onboard New Employee] * # of employee exits that were avoided

If these numbers aren’t available to you, feel free to use these benchmarks in your calculations:

US benchmarks place the cost of turnover at $19,850/employee

For employee exits avoided, use 45 employees for every 1000 employees in your organization.

Kudos clients typically see an ROI between 2.5 - 7x (in other words, between 250% to 700%).

When employees stay longer, perform better, and feel valued—that’s ROI you can both feel and measure. This is when recognition-powered retention becomes a high-impact, low-cost win.

Why Kudos Is Your Future-Focused Partner

This is where Kudos recognition software steps in—not just as a tool, but as a strategic partner in building high-engagement cultures.

With Kudos, clients report:

• 99% activation among employees, and monthly platform utilization rates over 90%

• A 2.5x increase in recognition volume over time

• Turnover reductions yielding an ROI of 300% or more

These aren’t overnight wins—they reflect sustained culture-building that pays off in productivity, loyalty, and measurable cost savings.

Real Results: How Kudos Clients Are Reducing Turnover

Oregon Community Credit Union — 95.6% Employee Retention

From fraud prevention to collaboration and milestones, Oregon Community Credit Union (OCCU) uses recognition to spotlight all wins—making appreciation a daily behavior, not just an annual event.

They also created custom badges in their Kudos platform that highlight behaviors aligned with their values like tenacity and humility, reinforcing culture while celebrating performance.  

Since 2021, over 100,000 recognition messages have been sent in their Kudos platform. OCCU has also achieved a best-in-class retention rate of 95.6% after implementing Kudos. With nearly 100% platform participation, engagement scores improved and turnover dropped.  

👉 Read more results and impact: How OCCU Fuels Engagement Through a Culture of Recognition

Uvalde Memorial Hospital — Reduced First-Year Turnover

At Uvalde Memorial Hospital (UMH), managers are expected to use their full Kudos points each month to ensure consistent recognition across roles and departments.  

UMH has seen a significant reduction in first-year turnover after emphasizing peer and manager recognition. They also scored in the 99th percentile for engagement on internal surveys.  

Engagement metrics like event participation and internal survey results consistently show upward trends year-over-year.

👉 Read more results and impact: Uvalde Memorial Hospital Uses Recognition to Build a Healthy Workplace Culture

Wilson — Built a Unified Global Recognition Culture

Wilson integrates Kudos into onboarding, recognizing new hires from the start to help build a culture of appreciation early on. Operating in over 65 countries, Wilson uses Kudos to unify their workforce.  

In internal engagement surveys, Kudos is consistently named the #1 way employees like to be recognized.  

👉 Read more results and impact: Wilson Powers a Distributed Workforce With Kudos

Small Investment, Big Results  

Beyond greater emotional investment with your company, employee recognition results in best-in-class corporate performance.

Recognition isn't just "nice to have"—it's a force multiplier. Here’s what recent data tells us:

• Motivation and productivity soar when recognition becomes frequent and meaningful  

• Turnover drops dramatically in recognition-rich environments.

• Business performance strengthens—with HR ROI clear, measurable, and powerful

The business outcomes and cost savings associated with high employee engagement paint a clear picture of why forward-thinking organizations are implementing employee recognition programs.

Activating a highly positive culture generates high-performance outcomes, because leading organizations reinforce what they stand for by recognizing their people every day. Frequently recognizing, celebrating, and encouraging teams to maximize their potential wins hearts and minds and desired outcomes.  

And the truth is: Kudos doesn’t just help you dream of this outcome—it makes it real, actionable, attainable, and scalable.