Perks On a Budget: How To Reward Employees Without Breaking the Bank

For many cash-strapped companies, perks like gym memberships, tuition reimbursement, and year-end bonuses may be among the casualties of this economic downturn. And while some budget cuts may be unavoidable, experts say that there are plenty of ways to reward, recognize, and help employees without gouging the bottom line.

In fact, many perks and rewards cost little or no money. And the companies that offer some of these low-cost perks—or those that retain their existing rewards and recognition programs despite poor economic conditions—can reap significant long-term rewards and recover from a recession more quickly.

To some, it may seem counterintuitive to continue investing in recognition and rewards programs during tough economic times, said Michelle Smith, vice president of business development at O.C. Tanner, and president of the board of trustees for the Forum for People Performance Management and Measurement. But companies that trim too many perks and benefits from their budgets often take longer to bounce back after a downturn. Budget cuts in the perks department may help in the short term, but they tend to lead to higher turnover rates, lower employee engagement, and lower productivity over the long haul.

On the other hand, research has shown that companies that continue to invest in perks, rewards, and recognition programs regardless of economic conditions tend to outperform their competitors, she said. The reason? Perks, rewards, and recognition programs help boost employee engagement. “And almost every aspect of a business improves when employees are engaged.” Lower turnover rates, lower absenteeism, higher profit margins, greater productivity, and increased sales growth are just a few of the long-term benefits that companies experience when they continue to make perks and incentives a priority.

The most successful companies tend to offer the best perks, said John Challenger, CEO and president of Challenger, Gray, & Christmas, a Chicago-based outplacement and executive coaching firm. “Companies need to find the right balance between cutting costs and preserving their cultures . . .”

And companies that trim too much in the perks department, sometimes lose top talent once economic conditions begin to improve, he said. Many companies experienced that during the period following the last recession in 2001.

Even if cuts are unavoidable, employers need to present employees with tools to help manage the ramifications of those decisions, said Lenny Sanicola, SPHR, practice leader, professional development at WorldatWork. And if companies need to make cuts, it's important that employees understand why the cuts are necessary.

Despite the current economic conditions, however, there is a silver lining, Smith said. The need to provide perks and rewards on a lean company budget can result in a lot of creative solutions and can provide opportunities to try new ideas and programs.

“So have fun with it and make it challenge,” she said.

Want some ideas? Smith, Challenger, and Sanicola offer some suggestions on how to increase employee engagement and reward employees on a budget:

• Provide flexibility. If you don't already offer telecommuting or flextime opportunities at your company, you might want to consider providing these low-budget benefits to your employees. Both can go a long way toward boosting employee engagement and overall satisfaction at work. In fact, there often is no benefit that employees value more than additional time—whether for vacation or for other activities that help promote work-life balance, Challenger said. Telework and different arrangements that help promote workplace flexibility may not cost a lot, “but they have a lot of bang for the buck,” Sanicola said. And they also can help attract and retain the right kind of employees. In some instances, offering telecommuting, job sharing, and flexible work arrangements also can help employees and companies save on commuting costs and other expenses. Many employees would love to work from home at least one day a week, Smith said. “So awards don't have to be the toaster or a TV.”
   
• Get creative. It's important to listen to what motivates individual employees so that you provide the right rewards to the right people, Smith said. “No one award is going to work for everyone.” If employees have mentioned low-cost perks in the past, now might be a good time to consider providing those. For example, employees may have mentioned their desire to have a casual dress day at work or the opportunity to eat outside during warm-weather months, she said. In other workplaces, employers might consider providing lunch to employees once a week. Simple moves like offering parking closer to the office building to reward employees also can be a welcome perk. For other employees, the opportunity to work on a project not normally within their scope of responsibility might be a welcome benefit and challenge. For example, someone in the finance department might be asked to offer their perspective and input on a project in another department.
   
• Offer training. Many employees want additional training, so instead of rewarding them with a big-screen TV, give them the opportunity to take a course, Smith said. Providing retraining opportunities also can be welcome—particularly in this economic climate. It can help employees keep their skill sets current and help protect employees as market conditions change. It's also important to remember that training doesn't have to cost a lot of money either. Given the current economic climate and the need to retain top talent, companies also may want to provide training to managers to make sure they know how to properly reward and recognize employees, Smith said. In this soft economy, it's more important than ever that managers know how how to recognize employees' good efforts, that they are specific in their praise, and that they have the tools and resources they need to reward and recognize employees who are doing a good job.
   
• Provide seminars. With so many people concerned about the economy these days, companies might want to consider providing some financial education seminars to employees, Sanicola said. Classes on how to manage debt, how to stick to a budget, and how to stay on track with their 401(k)s might be particularly welcome right now. Weekly lunch-and-learns are the perfect venue for these types of classes.
   
• Offer support. Many employers have employee assistance programs (EAPs), but they often do not do a very good job of publicizing them as a benefit, Sanicola said. With so many economic stresses—financial and otherwise—some employees may benefit from talking to a professional about coping strategies. And given the current economic climate, now is an opportune time to get the word out about the existence of these programs at your company, he said.
   
• Increase access. While it's not a perk per se, offering increased access to your company's senior leadership can be a real bonus for some employees, Smith said. It can be a low-cost way to make employees feel more connected and to provide them with an opportunity to provide feedback to senior leadership. You can provide these opportunities by allowing a certain number of employees to have lunch with the CEO every month or by encouraging senior leaders to routinely walk around and chat with employees. This also provides employees with the chance to voice concerns and for company leaders to provide needed answers, Smith said. It helps build employees' trust, which helps keep employees engaged.

Written by Jenny Cromie, certified human resources specialist (CHRS)