Motivating Employees in Tough Times

Aug. 1, 2009
Despite tough economic times, a new white paper indicates there are steps employers can take to sustain employee engagement.

Every employer and employee in the United States has been on an economic roller coaster ride for the past 2 years. Business is up. Business is down. We're hiring. We're downsizing. Many employers who wanted nothing less than 10 percent growth every year are settling for not losing money.

In this age of pay cuts and “lean” everything, employers need to remember that employees are their biggest contributing factor for success or failure in the drive to do more with less.

According to a new white paper, “Optimizing Human Capital Assets in Tough Times,” “No matter what the business model, value propositions have become increasingly knowledge-based and service driven. Smart executives know that, rather than any new technology or product offering, it is the ability and attitudes of their people that's more likely to set a firm apart from its rivals. People spur innovation, cultivate customer loyalty, drive productivity and ignite economic growth.”

“As today's executives wrestle with sustained economic uncertainty and frequently changing value propositions, they need to hold fast to the idea that engaged employees can set their firm apart,” says Karen Renk, CAE, executive director of the Incentive Marketing Association (IMA). IMA's Performance Improvement Council (PIC) published “Optimizing Human Capital Assets in Tough Times.”

“Even though raises and bonuses have all but disappeared from the economic landscape, we wanted to help employers understand that non-cash recognition can still be a very powerful employee motivator,” adds Renk. The new white paper examines:

  • How companies can sustain their corporate culture through employees;
  • How employees can drive much-needed innovation;
  • How employers can reinforce the right behaviors; and
  • What it takes to keep the best performers.


Employees might be an employer's largest cost, but they also can be the greatest resource. Progressive business leaders are searching for effective ways to optimize their investment in their employees.

While there certainly are costs associated with recruiting, hiring, training and providing benefits for employees, direct compensation is how many companies “show their love” to employees. As employers tighten their belts, salaries are being frozen or cut, and traditional annual raises or bonuses are becoming scarce. This means that managers have limited ways to show appreciation for their employees.

The PIC white paper notes that with a shrinking compensation pool to draw from, many employers and managers are left wondering how they can continue to motivate employees to reach goals that are crucial to the success of the business and to attract and retain good employees while not offering the generous compensation and bonus packages that were standard in better economic times.

If increasing an employee's salary isn't an option, then employers need to find other ways to sustain culture and retain employees. It might not be as hard as you think.

In the article “Employee Motivation: A Power New Model” (Harvard Business Review, August 2008), the authors argue that people are guided by four basic emotional needs that are not completely satisfied by traditional forms of compensation.

According to the article, compensation works for some of those needs. For example, employees are motivated by their desire for more money to acquire tangible things such as homes and cars. Employees also are motivated by a desire to defend what they already have, ie., by being able to make mortgage payments.

However, the Harvard Business Review paper also contends employees need to learn and bond with others to feel fulfilled. This means that employees need to learn new skills and acquire new knowledge in order to feel fulfilled and motivated to come to work. It also means that employees seek connections with customers, managers and coworkers. They want to contribute to the success of a group and feel part of that success.

A smart employer wishing to show appreciation for workers fosters these human relationships and provides employees with stimulus to make their days at work interesting.


The PIC white paper declares, “We need to feel needed,” adding that most people grow frustrated if they feel their efforts are not contributing to the good of the business or are not being recognized.

“Good sales people and customer-facing employees in particular have these traits at higher levels than say an accountant. But all employees … all people … take pleasure in knowing they are important parts of the groups they value,” say the authors of the PIC white paper.

Dr. James Oakley from Purdue University examined the impact of compensation and the role it plays in fostering and sustaining culture in his study, “The Road to An Engaged Workforce.” In Oakley's opinion, all forms of compensation must be leveraged to drive the culture that's right for your business. According to Oakley, the effective use of recognition, such as using non-cash rewards that are distinct from ongoing compensation, is a powerful tool for sustaining culture, driving innovation and rewarding the right behaviors across the corporation.

All employers acknowledge that the “old” way of running any business isn't effective in today's economy, requiring a need to respond to the marketplace with true creativity. Research and development departments traditionally have been tasked to create new products, services and processes. But according to a 2005 CEO survey conducted by IBM, over 40 percent of new ideas are coming from employees across the business. By comparison, just 14 percent of new ideas were attributed to R&D departments.

“It's the employees who are dealing directly with customers and wrestling with business challenges who are best equipped to generate the next game-changing concept,” say the authors of “Optimizing Human Capital Assets in Tough Times.” “Recognition can be an important catalyst in sparking these innovations. Everyone wants to know his/her contribution makes a difference, especially when the need is great.”

In a study done by a marketing company that explored the motivators for submitting business improvement ideas, the No. 1 reason given was “the pride of seeing my idea implemented.” Formal recognition is a way to tangibly recognize an employee's contribution.

“The payoff for promoting and recognizing employee creativity can be enormous,” claim the authors of the white paper. “In the 2008 Employee Involvement Association Suggestion System Survey, the 33 participating companies reported a total savings of over $564 million, with an average savings of nearly $9,000 per implemented suggestion.”


Wise employers don't encourage short-term business results at the expense of the long-term value of the brand. You need to recognize employees who actively live the company's stated values.

Progressive companies are finding ways to acknowledge how well employees contribute to their vision of corporate social responsibility (CSR). And there's a payoff: many consumers seek to spend their money with companies who exhibit concern for the environment and for causes such as disaster relief or charities.

Encourage employees in their philanthropic efforts to make your company more environmentally friendly and acknowledge and celebrate their efforts throughout the company.

Implement their conservation suggestions, offer to sponsor them in races or walks that benefit charities or offer paid time off to employees who wish to volunteer as mentors in local schools or at organizations such as food banks. You'll be surprised the value these small acknowledgements will have to your company's reputation in your community. And your employees will be proud to work for you.


As a complement to compensation strategies, reward and recognition practices promote the company's culture, drive innovation and foster the behaviors that help a company deliver on its brand promise. At the end of the day, building a culture of recognition is about retaining great employees.

In a national study on the link between recognition and performance, nearly 80 percent of employees stated it was “very or extremely important [for employees] to be recognized by managers when they do good work.” It's good for the corporate bottom line too: A 2005 Gallup survey found that organizations where employees have above average attitudes toward their work had 38 percent higher customer satisfaction scores, 22 percent higher productivity and 27 percent higher profits.

John Stumpf, president and CEO of Wells Fargo, very publicly stated his support for recognition of employees in an ad in the Wall Street Journal. In that ad, Stumpf wrote that the recognition energizes employees. “It inspires them and their team members to want to create an even better experience for our customers … We believe our profits actually increase by rewarding and recognizing our best performers.”

Stumpf recognized that praising, acknowledging and rewarding employees can help sustain his corporate culture and reputation, drive innovation, reinforce the right behaviors and attract and retain good employees.

“Nearly every organization today is re-examining every aspect of its business, debating every cost and looking for even more ways to trim costs while still hoping to find effective ways to exploit competitive advantage,” says Mike Ryan, current president of the PIC. “People are clearly that competitive advantage, the challenge lies in finding cost effective ways to unleash human innovation, promote the right behaviors and keep the right people performing to the optimum level despite the economic chaos.”

(For more information about the white paper “Optimizing Human Capital Assets in Tough Times,” visit

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