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This research focuses on rewards and recognition that are contingent on an employee's work performance. Because people represent a potential source of sustained competitive advantage, rewards and recognition strategies are significant to organizations' success or failure. Highly engaged and satisfied employees are generally more productive and offer superior service than their counterparts. Therefore, HR managers should implement policies and practices that focus on employee engagement, satisfaction and service orientation to enhance organizational performance.
Organizations across the world seek to retain their talent. The loss of an employee has been proven to cause exorbitant costs in the recruitment, selection and training of a replacement - costs amounting to a full year's compensation or more. Moreover, an organization's workforce is among its most precious resources. Skilled and competent employees - and thus their retention - are acknowledged as being imperative for business success. Rewards and recognition are important resources that can motivate employees to accomplish organizational goals and play a key role in employee retention. To guarantee not only the retention of, but also optimum performance from, its employees, an organization must offer a range of diverse means of rewarding its employees.
With workers constituting about 80% of a company's expenses, it is vital that the workforce be engaged. Employee engagement not only promotes retention but enhances customer satisfaction, customer loyalty, company reputation and overall stakeholder value. Engagement is found to correlate with positive organizational outcomes such as lower absenteeism, lower turnover intention, lesser costs and higher growth. Effective rewards and recognition systems improve employee engagement and enhance work performance (Fairlie 2011). Rewards and recognition have long been established as an antecedent of employee engagement.
EMPLOYEE ENGAGEMENT
Rewards and recognition have major potential to boost employee engagement and corporate performance in a world in which four out of every 10 employees are not engaged (Brown and Reilly 2013). According to Gallup (2018), only 34% of the U.S. workforce is engaged, with 53% not engaged and 13% actively disengaged. Aktar and Pangil (2018) empirically found that effective rewards and recognition positively influence employee engagement.
Employee Turnover Cost
The direct economic costs associated with losing talented employees include replacement of the employee, separation of the employee, downtime, recruiting, interviewing, onboarding, and training and development of the new hire....