Can you tighten the belt and loosen the purse strings?
Okay, here's another blog post that starts with the obvious: We are in an economic downturn. A slowdown. Tough times. A financial crisis. A recession. The question is: how can you maximize a compensation budget that's likely frozen, if not shrinking?
Despite the hard times, companies still need to recognize employees and reward them accordingly. It's likely that people are working increased hours and doing more with less, and productivity can take an especially hard hit very quickly. The struggling economy is not an excuse to put up a poster that says "be thankful you have a job." Though I doubt any company would literally do that, that sentiment is being felt everywhere, and it's a morale killer. So fostering creativity is key and should be the foundation of thinking about rewards that are meaningful but don't cost a lot.
Many compensation experts look at this economy as an opportunity to reassess the company's overall pay strategy. It's more important than ever to reallocate resources to reward high performers, since they're the ones that will see you through the tough times. It may be a good idea to talk with employees and see what they find rewarding and engaging and then find ways to make those things happen. This can be done during performance management meetings or just in casual supervisor/employee conversations. It can also be a time to look at the performance metrics themselves. Chances are that last year's goals have shifted significantly thanks to the new business environment. There should also be a reassessment of return on investment. If it costs $50 a year in management and administration to deliver $50 worth of stock, put $75 into the bonus pool to help reward high performers and save $25 at the same time.
Non-cash rewards also take on greater significance in times like these. They could be gift cards or certificates, merchandise, dinners, trips, trophies, plaques and even special parking spots. Sometimes a public listing of top performers is enough. In any case, non-cash rewards can't be thrown around without some forethought. They need to be integrated with the overall performance management strategy. The guidelines for achievement must be clearly communicated. There should also be a wide array of customizable rewards available that is kept fresh and interesting.
Some other well-received, short-term solutions include incremental payouts of annual bonuses to provide immediate relief to employees, offering unpaid sabbaticals with benefits continuation, and offering reduced workweeks. Educational opportunities can also be rewarding, for both employee and employer. Simply allowing employees to adjust their work hours to better fit their life can be a highly valuable reward. Some employers are helping workers adjust to the stress the economy causes (at the same time addressing impaired productivity due to stress) by providing financial counselors for their employees. This can be done through programs in the workplace and during the workday as opposed to having the employee pursue it after hours.
The key is to be innovative and creative. Simply throwing your hands in the air and pointing to a chart of the Dow is not going to keep employees motivated and engaged.