The Connection Between Recognition and Employee Wellbeing

Practicing a holistic approach to employee wellbeing—supported by recognition—is essential for today’s organizations. Neglecting wellbeing can lead to low productivity, burnout, and high turnover. According to Gallup, the cost of voluntary employee turnover due to burnout alone amounts to 15% to 20% of the payroll budget each year.

When your employees are thriving, your organization directly benefits. They take fewer sick days, deliver higher performance, and have lower rates of burnout and turnover. But when your employees' wellbeing suffers, so does your organization's culture and bottom line.

So how does recognition fit into this equation? Research shows that employees who feel appreciated are more likely to thrive and have a better quality of life. They enjoy higher rates of wellbeing and this impacts every aspect of your company culture.

What is employee wellbeing?

Employee wellbeing is an individual’s ability to manage daily stress, maintain productivity, and pursue personal and professional growth. Recent research highlights a clear correlation between employee wellbeing and workplace performance.

Traditional approaches to wellbeing focus on the physical aspect of wellbeing—often integrating wellbeing programs with health plans and screenings. Organizations have an opportunity to make a substantial impact on workplace culture by expanding programs to address emotional and social wellness. Because each person is so much more than the results of their latest physical exam. 

Wellbeing requires a more holistic approach, encompassing the myriad emotions and experiences that make up the full range and complexity of a person’s life.

Why is employee wellbeing important?

At the core of every successful organization is its people. Employees create innovation, nurture relationships with customers, and drive growth. But when employee wellbeing suffers, so does everything else—productivity, retention, recruitment, and ultimately, the organization’s bottom line.

Investing in employee wellbeing is about more than just mitigating stress. It’s about creating a culture where employees feel valued and supported, both at work and in their personal lives.

Organizations that take a holistic approach to wellbeing—recognizing and addressing challenges employees face outside of work—demonstrate a commitment that not only drives engagement but also promotes lasting success for your people and your organization.

Mental health and employee wellbeing

The consequences of poor employee wellbeing extend far beyond the workplace. Mental health struggles triggered by work can spill over into personal lives, affecting everything from sleep to relationships, and leaving employees with lingering anxiety or depression long after the workday ends.

Employee wellbeing appears to be at a low point in recent years. The 2025 O.C. Tanner Global Culture Report notes that, “Mental health issues are common, costly, and rising to the top of employers’ minds. According to a study by Mind Share Partners, 76% of U.S. workers have at least one symptom of a mental health condition—burnout, depression, or anxiety. These ailments also prove widespread in our global research this year. Employees who could qualify for a probable diagnosis of depression: 44%. Those who could qualify for a probable diagnosis of anxiety: 39%. And employees who reported levels of burnout: 77%.”

For all the data and insights from the world’s top organizations, check out this year’s Global Culture Report.

“Creating a mentally healthy workplace should no longer be considered a peripheral concern for leaders. It is something that needs to be at the core of successful, thriving organizations.”
—Professor Samuel Harvey, Executive Director and Chief Scientist, Black Dog Institute Australia

Thriving and workplace wellbeing

A recent Gallup poll reveals that only 52% of Americans consider themselves to be thriving, a decline from previous years. Research in the Global Culture Report indicates similar trends across other countries. This downturn is largely driven by rising daily stress and anxiety, exacerbated by concerns about personal finances.

The combination of these factors is contributing to a significant decline in overall wellbeing, highlighting the urgent need for organizations to address these challenges through targeted wellbeing initiatives.

When employees feel they’re thriving at work, the odds of several important outcomes improve significantly:

• Retention (6x)
• Promoting the organization to others (7x)
• Great work (8x)
• Overall satisfaction with employee experience (14x)

According to research from the O.C. Tanner Institute, once basic needs are met, three key elements elevate an employee’s sense of thriving in the workplace: flexibility, skill building, and career development.

Research in the 2025 Global Culture Report shows 3 clear ways to help employees thrive, which will lead to improved wellbeing:

1. Provide Total Rewards packages that offer long-term security
2. Approach offerings in a people-centered, purpose-driven manner
3. Recognize employees often to reinforce security, inclusion, and belonging

Understanding some of these key factors that impact employee wellbeing is the first step in building a thriving workplace culture. And that all begins with a culture of recognition.

“Wellbeing comes from one place, and one place only: a positive culture.”
—Emma Seppala and Kim Cameron, Harvard Business Review

How employee recognition improves wellbeing and HR metrics

There is a powerful relationship between employee recognition and wellbeing. Research shows that business leaders can significantly lower turnover rates by actively promoting both a culture of wellbeing and genuine recognition experiences. 

In fact, employees working in a culture of recognition are 38% less likely to leave. This finding underscores the strategic value of fostering a workplace culture that prioritizes both employee wellbeing and appreciation, reinforcing their importance as key drivers of retention.

By integrating wellbeing and recognition initiatives, companies can cultivate more positive and meaningful employee experiences. This approach creates a culture that prioritizes the holistic development of employees, acknowledging them not merely as contributors to productivity but as valued individuals.

Research in the Global Culture Report shows that when employees experience recognition, either by receiving or giving recognition, they felt an 8.8% increase in their wellbeing. Effective recognition also yields a:

• 29% increase in the feeling of work/life balance
• 33% increase in a sense of belonging
• 27% increase in overall self-rated health

When employees feel genuinely cared for and supported, they are more likely to remain loyal to the organization. A workplace that encourages authenticity enables employees to fully engage and thrive, ultimately driving both personal fulfillment and sustained organizational success.

3 ways to use recognition to improve wellbeing

Done right, an employee recognition program seamlessly integrates with wellbeing programs to create a holistic employee experience that nurtures both recognition and wellbeing. Recognition enables organizations to celebrate employee contributions in real time, creating a culture of connection that elevates wellbeing among all employees. Here are three ways to get started with your own team:

1. Focus on the bigger picture of recognition

To enhance employee wellbeing, organizations should expand their focus beyond physical health to include emotional, mental, and social wellbeing. Employees increasingly seek deeper connections—with themselves, their colleagues, and their broader communities. Encouraging volunteerism, nurturing workplace friendships, and creating opportunities for social engagement can fulfill this need for connection.

By adopting a holistic approach to wellbeing, companies help employees bring their best selves to work. This not only prepares them to navigate workplace challenges but also encourages innovation and problem-solving. Employees who feel socially connected are healthier, more engaged, and more likely to contribute positively to the organizational culture, ultimately driving better business outcomes.

For expert insight into designing an effective workplace wellbeing program, watch our webinar, Maximizing Employee Wellness.

2. Enable employees to give and receive recognition

A structured recognition program that enables employees to express gratitude can significantly reduce the risks of burnout, anxiety, and depression, as well as lower absenteeism, presenteeism, workplace accidents, and formal grievances. However, simply having a recognition program is insufficient.

For recognition to be effective, it must be fully integrated into the daily employee experience. Tools and processes should support frequent, timely, and meaningful recognition, offering diverse opportunities to express appreciation and gratitude.

Leaders and employees should be encouraged to deepen the impact of recognition by aligning it with a greater organizational purpose, being specific about individual contributions, and building a sense of genuine, positive connection. This approach not only amplifies the value of recognition but also strengthens the broader workplace culture.

3. Develop emotional intelligence with recognition

Research in the Global Culture Report shows that overall employee wellbeing improves significantly when everyone increases their emotional intelligence. Data shows the EQ of employees and leaders rises at organizations where all workers give and receive recognition.

Recognition helps employees develop and practice crucial skills such as empathy, self-awareness, and communication. These are important skills to have when building a larger culture of connection and collaboration.

When paired with wellbeing initiatives such as flexible work arrangements, mental health support, community involvement, work-life balance, and inclusivity, recognition reinforces employees' sense of value and belonging. These are crucial factors for the mental and emotional resilience that lead to many years of retention and great work.

Recognition helps create a workplace where employees feel appreciated and supported, leading to both individual and organizational success.

‍

More than 3,000 companies all over the world trust Culture Cloud by O.C. Tanner to help them attract and retain talent, strengthen teams, and build exceptional workplaces. Learn more at octanner.com.