Employee turnover is expensive. Gallup estimates that replacing leaders costs 200% of their salary, technical employees 80%, and frontline workers 40%—not including losses in morale and expertise.
How can HR teams increase employee loyalty to keep these costs down? A new report suggests that empowerment to save toward a chosen reward is sticky enough to keep employees engaged and on the job.
Released today as an exclusive to HR Executive, a recent whitepaper about users of Salt—the employee rewards platform recognized as a 2024 Top HR Tech Product—found that employees participating in its loyalty program experienced 62% lower turnover rates than non-participants. Dr. David Kryscynski, an associate professor of HR management at Rutgers University, analyzed the research, which spanned six companies and 60,000 employees.
A separate Gallup analysis found that highly engaged companies had lower turnover, less absenteeism and more thriving employees, showing the impact of engagement on performance and loyalty.
Several factors—including a sense of ownership and the ability to save up for a desired reward—contribute to Salt’s effectiveness in building employee loyalty, according to the Salt team. The platform operates by awarding points to employees for hours worked, which can then be redeemed by employees for experiences they might not typically purchase themselves, including stock options, luxury experiences and trending retail items. This approach draws from established loyalty program concepts in the airline and retail sectors, combined with behavioral science principles.
Employees who ‘want to work more’
The immediate reward system provides instant recognition for time worked rather than delayed acknowledgment. For hourly workers, the accumulation of redeemable points creates an additional financial asset alongside their regular compensation.
Employers can also incentivize employees to claim hard-to-fill shifts by offering Salt rewards. “We want to make employees want to work more,” says Jason Lee, founder of Salt and chief of Chime Enterprise.
Loyalty doesn’t only impact turnover levels. Lee says that many employers tell him they have enough workers, but they aren’t being as productive as they should be. Still, organizations are reluctant to let them go—particularly in a period of constrained budgets—because they aren’t sure if they’ll be able to replace them. Lee adds that employees with a longer tenure also tend to be more productive as they get better on the job over time.
Other research projects reflect outcomes similar to those of the Salt study. The ongoing meta-analysis by Gallup mentioned above examined 736 research studies from 347 organizations across 53 industries and 90 countries, covering 183,806 business units with over 3.3 million employees. Gallup researchers measured the link between employee engagement and 11 performance outcomes, including profitability, productivity, turnover, safety and customer loyalty.
Gallup found that organizations in the top quartile for employee engagement experienced up to 51% lower turnover, 78% less absenteeism and 70% more employees thriving in wellbeing. These statistics demonstrate the significant impact of employee engagement on various aspects of workforce performance, including loyalty.
Lee says Salt “represents enablement” as employees value the ability to build toward something they really want. Kryscynski points out that a sense of autonomy makes employees feel empowered.
“Traditional rewards programs typically rely on manager discretion for employee recognition,” notes Dr. Kryscynski. “This model instead provides direct rewards for time worked, potentially increasing employees’ sense of ownership in their relationship with the company.”
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