Maintain morale in a downturn

As many employers look to make cost savings, it is still important to reward valued staff as their morale is vital to businesses’ long-term prospects, says Nicola Sullivan

During periods of economic instability many employers will be keeping a close eye on benefits expenditure, looking for ways they can control or reduce costs. In some cases, the easiest way of achieving this is to cut smaller non-contractual perks such as motivation schemes. However, this could be a mistake, as it risks alienating the employees an organisation needs most if it is to successfully overcome the challenges created by an economic downturn.

In such times, it is particularly important to maintain or boost the morale of talented and valued employees who may easily become demoralised by the loss of colleagues through redundancies, or when struggling under the increased pressure of a bigger workload.

Despite heightened insecurity about the job market, staff who believe their employer is either ignoring or is failing to meet their needs are more likely to look elsewhere for better reward packages. Employers will also want to ensure they are able to retain talented staff and avoid the high costs associated with recruiting new employees. This may mean they need to rethink their reward programme, and in some cases, even have to invest more money in engaging staff.

Derrick Hardman, managing director at Capital Incentives and Motivation, says: “Businesses tempted to spend less on rewards [risk] further demotivating staff already struggling with the pressure. Rather than cut back on reward, businesses that want to motivate staff will be maintaining, even investing more, to build morale.”

There are plenty of ways employers can link motivation schemes to staff performance, other than by using bonuses, which are often contractual. They could even come up with a scheme that helps engage staff through tough economic times. The solution for some organisations may lie with a suggestion scheme that rewards staff for innovative ideas, says, Sheila Sheldon, director of European operations at Michael C Fina.

Through such schemes, employees can be rewarded for coming up with ideas that can save their organisation money. This could be for something as simple as launching a campaign to switch lights off which have been left on in parts of the office unnecessarily. “Employers should look at ways the company can make savings and suggestion schemes are a very good way to do this. An analysis should be done into the savings made and a small proportion can be passed on to the individual,” says Sheldon.

Employee recognition schemes, which can be structured to allow staff to nominate each other to receive rewards or to enable managers to award good performance, are also an effective way to ingrain company values into the workforce and motivate employees for the challenges ahead.

Long-service awards, meanwhile, can be used to increase employees’ loyalty to an organisation. Sheldon believes employers should reward all employees every year that they are with the company. These awards do not have to cost the earth and could be as simple as a letter from the organisation’s chief executive thanking the employee for their hard work or a certificate recognising their service.

“Gone are the days where people were rewarded for staying with the company for 25 years, but [staff] need to be constantly reminded that they are important to the company. Actually bothering to take the time and giving [employees] some form of recognition in front of their peer group is extremely important,” explains Sheldon.

Even when times are tight, employers should not cut back on some of the more traditional financial benefits when it comes to motivating staff. Employee share plans, such as sharesave schemes, for example, can be used to boost staff retention, as well as generate a vested interest in the success of a company among employees. However, employers need to be careful about communicating such schemes to staff if they are to convince them of the value of investing in shares, especially if their share price has dipped of late.

Another effective way to motivate staff during a slowdown and a period of rising inflation is to address the fact that some will be struggling to meet basic living costs by, for example, offering them fuel and supermarket vouchers as either perks or incentives.

Andrew Johnson, director general of the Voucher Association, says: “There is a trend towards vouchers that may be used towards everyday items as opposed to being used for luxuries [as] we may have seen two years ago.”

Natalie Gunson, director of employee incentive company AYMTM, adds: “Rewards such as supermarket and fuel vouchers not only allow staff to purchase everyday items, but engage them with an award they feel is imperative in their lives – not just nice to have.”

Simply offering discounted retail vouchers for staff to purchase as a voluntary benefit may also help motivate the workforce, says Kuljit Kaur, head of business development at P&MM and The Voucher Shop.

Employers should ensure that incentives are suited to different age ranges, genders and interests. Retail vouchers can be used to optimise employee choice, says Catherine Forrest, incentives manager at House of Fraser. “What is key when organising any sort of incentive scheme is to profile the target audience in terms of gender, age and interests so that a relevant incentive can be supplied, whatever the budget,” she explains.

Schemes, which enable employers to award staff points that can be loaded on to a card or into an online account and then redeemed at a range of retailers also offer flexibility and choice as well as being relatively cost effective and simple to administer.

However, Kevin Harrington, research and development director at Sodexo, believes more luxurious incentives, such as a weekend break, are more memorable for employees. “When times are tough, it is good to reward your staff with something special. This will be valued and remembered,” he explains.

Employers should also consider whether they wish to use cash or non-cash rewards. Julian Bazley, incentives specialist at Maritz, believes non-cash rewards demonstrate a personal touch from managers. “Non-cash is a better option for recognition programmes, where the tangible value of the reward is less important than the status and acknowledgement delivered through recognition, which impacts engagement and retention,” he explains.

Revamping a motivation programme though, is easier said than done for many employers, especially those with tight cost margins. However, employers who are really feeling the pinch financially could consider a whole range of low-cost incentives, such as taking staff out for dinner, as well as giving out bottles of wine and bunches of flowers.

There are even some forms of recognition that cost virtually nothing. For example, letters can be sent to employees’ home addresses congratulating them for hitting certain goals or targets. Employers could even revert to the easiest form of recognition of all by simply thanking staff for a job well done, the power of which should not be overlooked.

How to motivate staff during an economic downturn

  • Long-service awards should be given to employees every year that they stay with the company to help increase retention.
  • Motivating employees does not need to cost a fortune because hard work can be recognised with letters, certificates and small gifts such as a bunch of flowers.
  • To show empathy with the higher cost of living, employers can offer retail vouchers for essential items, such as groceries or fuel.
  • Suggestion schemes, which incentivise employees for coming up with ideas to save their employer money; link reward with innovation.
  • Vouchers offer employees choice and can be offered at a discounted price through a voluntary benefits scheme.
  • Recognition schemes in which staff members nominate each other for positive behaviour are an effective way to ingrain company values into the workforce.

Case Study

Fujitsu Services

Fujitsu Services is well equipped to motivate staff during the credit crunch, having introduced a new reward and recognition programme almost two years ago.

The programme, which was introduced a few months after it was first piloted in 2006, aims to increase employees’ understanding of the company’s values. As it can be adapted to meet shifting goals, it is highly suitable to motivate employees during an economic downturn.

Through the scheme, which was implemented by Maritz, employees can nominate each other for either achieving a good outcome or working in a way that exemplifies the information technology company’s values.

Selected employees are presented with rewards, ranging from rally driving, spa days or weekend breaks to DVDs and plasma TVs. There is also a wide range of retail vouchers to cater for different tastes and employees can choose from prizes featured in an online catalogue.

The new scheme was based on an existing all-employee recognition programme called Value in People, which was introduced in 2004 to ICL (which later became Fujitsu Services) to help the company stay ahead of the competition by retaining its most talented employees.

Kirpal Haylat, a former reward consultant at Fujitsu Services, says: “The programme has helped everyone in the company to better understand and embed our values through their behaviour at work.”