Many workplaces face challenges around recruitment and retention, yet struggle to justify increased financial investment in rewards. Understanding how to make an emotional and personal connection to employees can make those budgets go further. Jo Faragher reports
The challenges of doing more with less show no sign of abating for HR teams. In a climate of lower budgets and demands from senior executives to prove return on investment, they’re having to become ever more creative in their reward and recognition strategies.
HR teams themselves are bearing the brunt of these challenges: recent research by Gartner found that 71% of HR professionals felt that burnout in their own teams was more challenging than pre-pandemic. More than half cited more complex demands in recruitment and retention as one of the underlying issues.
According to 2024 research from Reward Gateway Edenred (RGER), around half of employees have considered leaving their jobs in the last six months, yet 83% said they felt more productive if a manager truly appreciated or cared about them.
Making the difference
But what is the difference between rewarding and recognising an employee for their contribution and “appreciating” them? Chris Britton, people experience director at RGER believes there is a clear demarcation.
Retaining employees
“It’s not enough to just recognise what people do, you have to recognise people for who they are. They are human first, employee second,” he says.
The company’s Appreciation Index for 2024 found that businesses could unlock between 5% and 7% better business performance or profitability through unlocking this sense of appreciation.
This is further supported by research from the Haas School of Business at UC Berkeley. It found that people who felt recognised for their contribution were 23% more effective. Those who felt that people around them genuinely cared, meanwhile, were 43% more effective.
“Recognition is thanks for the work you do, your actions, meeting your key performance indicators,” adds Britton. “Appreciation is recognising who you are, your character, your values.”
On a practical level, HR teams and managers can unlock this difference through simple changes to how they give feedback, which should be “specific, personal and timely”, he says. So, rather than noting someone’s detailed report in an annual review, sending a personal message to acknowledge how it was written or something they did particularly well will have far more impact.
Lighting up the brain
Maria Fronoshchuk, behavioural architect manager at Cowry Consulting, a neuroscience consultancy, explains how this different approach “lights up” the brain in a different way.
“If we only focus on what someone does, we miss the bigger picture of who they are. This is the difference between recognition and appreciation,” she explains.
Tapping into this unlocks positive chemicals in the brain such as oxytocin, dopamine and serotonin, and in turn reduces cortisol, the stress hormone. As a result, employees are more likely to feel a connection to the workplace and a sense of belonging, she says.
When building reward and recognition programmes, companies can embed these approaches by aligning what they offer to Maslow’s hierarchy of needs, adds Lyla Taguma, a neuroscientist and behavioural designer at Cowry.
So at the lowest level, organisations would offer “basic” needs, including a fair rate of pay and essential benefits, and ensure they did not feel overwhelmed by work levels or hours.
Moving up the hierarchy, they would help employees to feel more socially connected and demonstrate more empathy. “This comes through better communication and a healthy culture. In unhealthy environments, employees feel they cannot express emotions so empathy is lacking, and this impacts retention,” Taguma explains.
Towards the top of the pyramid, organisations need to be reflecting workers’ self-esteem and self-actualisation needs, which can come through open and accessible career paths, or supportive learning systems that help them “become the best version of themselves”.
Conversation vs transaction
Nebel Crowhurst, chief people officer at RGER, says the company uses this approach in how it supports its own employees. Under ‘Moments that Matter’, managers can recognise or celebrate milestones in employees’ lives outside of the traditional benefit offering, such as passing a driving test or even getting divorced.
“Not everyone gets married or has a baby, so we wanted to personalise benefits to the milestones that mean the most to our employees,” says Crowhurst.
Phil Williams, head of employee programmes for EMEA at BI Worldwide, agrees that long-term engagement depends on “emotionally resonant” experiences, rather than transactional rewards. He describes recognition as “a conversation rather than a transaction”.
“When someone receives a generic bonus or a blanket ‘thank you’, their brain processes it very differently to a personalised message that acknowledges their individual effort, or support during a life event. We’ve seen again and again that organisations that treat employees as individuals, not just roles, create stronger, more loyal cultures,” he says.
“For example, recognising a colleague’s first year as a parent, or privately acknowledging their resilience during a tough patch, has far greater emotional impact than a generic team-wide shoutout. These moments show people that who they are matters – not just what they do. That’s what drives belonging. And belonging drives retention.”
Meaningful recognition
How does this work in practice? Justine Woolf, director of consulting at Innecto Reward Consulting, says a simple way to enact this is by asking employees about a time they felt recognised.
If we only focus on what someone does, we miss the bigger picture of who they are” – Maria Fronoshchuk, Cowry Consulting
“What was it for, what was the nature of the recognition, and how did it make you feel? Almost always, the examples that people remember are those that took them unawares (that is, they didn’t expect it or were pleasantly surprised), and were deeply personal (the recognition was meaningful to them), or had an element of fun associated with them,” she suggests.
“Recognition doesn’t have to be big money – we often don’t remember the cash awards. But where it involves others, it’s more likely to create a lasting memory because it is shared. If we want to connect at a deeper level with employees, we need to understand them personally so we can make recognition efforts meaningful.”
In fact, it does not have to be a formal reward at all. Amy Brann, author of upcoming book Make Your Brain Work, adds: “When someone feels truly seen at work – through a manager taking time to listen, offering tailored support, or acknowledging a life event – it activates the brain’s ventral striatum and triggers the release of oxytocin, strengthening social bonds and trust.
“Crucially, when recognition costs the giver time or attention, the recipient’s brain registers it as authentic investment, deepening emotional resonance.
“This contrasts with cash or perks, which may trigger short-term dopamine spikes but lack the relational depth that sustains loyalty. Personal connection tells the brain: you matter here, which builds belonging – and belonging is what keeps people.”
Increased disconnect
Archana Mohan, a chief operations and technology officer in financial services, cites recent research from BetterUp showing that 43% of UK employees feel disconnected from colleagues, leading to an absence of belonging in the workplace.
In this context, she advocates “care over cash” to re-cultivate those feelings of belonging and to aid retention.
“Crucially, care is not about being soft. It’s about being present,” she says. “Creating psychological safety, where people feel secure enough to speak up, make mistakes, or challenge ideas, is now recognised as one of the top drivers of high-performing teams. In a post-pandemic world where disconnection and uncertainty run high, care isn’t just comforting, it’s essential.”
With workplaces increasingly struggling to hire and retain employees – particularly Gen Z employees – thinking more about the neuroscience of reward could unlock new levels of engagement without a high financial investment.
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