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Ask the Experts: How to Justify Incentives During a Recession
February 18, 2009
Got recognition? RPI members Cheryl Miller of Wells Fargo, Michelle Smith of O.C. Tanner, Kevin Cronin of Perks.com and Peter Hart of Rideau answer your toughest recognition questions.
By Kevin J. Cronin, Dee Hansford, Michelle M. Smith and Peter W. Hart
Q. I am a manager at a large public agency. Due to the state’s budget crisis, unpaid "furloughs" will probably be mandatory. Two days off a month means a 10% reduction in pay. On top of that, our workload stays the same. Morale is understandably low. What can I do?
 A. While you don't have control of external forces, you and your staff can determine how you will react during these difficult times. Don’t be passive. The best defense against being "victims" is a solid plan of action. In fact, now is a good time to emulate General Norman Schwarzkofp, Jr., a brilliant strategist during the Gulf War.
Gather your troops and take a cold hard look at your workload. Ask:
• How can we streamline processes, delay projects and stop doing low-value tasks that will reduce our workload by at least 10 percent?
• How will we maintain quality and continue to serve our customers?
• How will we communicate with them so they understand why the changes are being made?
Your staff will gain a real sense of control when they know exactly how they can continue to take care of customers. Reinforce and recognize them for doing that.
Organize a weekly or monthly pot luck lunch where everyone brings a dish and story about customer service or how a peer stepped in to help with a project. Stories are powerful. Sharing them, along with home cooked food, is one simple but effective way to strengthen your bond with each other—and your customers.
—Dee Hansford, CEO, Dee Hansford Consulting
Q. I am a manager in charge of my company's recognition and reward programs. We are experiencing cutbacks and layoffs. Senior management is asking me to justify our recognition and reward spend during these difficult times. How should I respond?
 A. Although times are difficult, there is a long-term silver lining in having to justify your recognition and reward programs. All too often senior management equate "rewards" with "recognition" when in fact, they are very different things. Rewards are usually material items such as watches, clocks, iPods, trips etc.
Recognition, however, is all about an employee's feelings. It's about feeling valued and respected for who they are and what they do. Just because you give an employee a gold watch does not necessarily mean you have recognized them!
With that said, real recognition doesn't need to cost a lot. In my opinion, recognition starts with execs knowing a person's name. Meaningful words can be more powerful than the most golden of watches. Recognition costs nothing. Rewards do. Depending on the severity of the problem in your company, you may not be able to defend your entire "rewards" budget, but you need to defend the concept of "recognition."
Senior management may decide to cut back on material rewards but they should and must embrace recognizing individual employees for who they are and what they do each and every day. Teach senior management the difference between recognition and rewards. That will become your company's long-term silver lining!
—Peter Hart, president and CEO, Rideau Recognition Solutions
Q. I am concerned that my company is cutting all recognition and reward budgets almost to nothing, what can I do to help minimize this?
 A. Everyone understands that budgets for 2009 will need to be adjusted due to the operating environment. But let us all remember, pure recognition costs nothing—well, maybe a little time and energy. In our challenging environment it is important that we make recognition a part of our work environment daily.
• Make recognition the starting agenda item for each team meeting.
• Call your employee's house, leave a voice message and let your employee's spouse/partner or kids they are doing a great job and how much you appreciate they are on your team.
• Make sure your calendar has the birthdays and the date of each employees yearly anniversary, and recognize them each year on that date.
• Most of all be sincere in your recognition and specific in what they are being recognized for.
Recognition makes great business sense, and the proof will be when your customers see a happy team that is engaged vs. a team with low morale. They will buy more from you and be more likely to recommend your product or service.
—Kevin Cronin, vice president, recognition and reward solutions, Perks.com
Q. My company believes in recognition whole-heartedly, and we’ve always run programs for employees and customers. However, this year we're forced to make significant cuts. What would you suggest to minimize the consequences of our reduced budgets?
 A. I applaud your commitment to recognition and empathize with your concern about cutting valuable and effective programs. While you're in a difficult position, there’s a solution where you can cut one entire program and still achieve virtually the same results with both employees and customers as you have in the past.
A wealth of research studies has discovered a very strong correlation between the level of employee satisfaction in an organization and the level of customer satisfaction and loyalty to that organization. The data would certainly suggest that cutting any of your employee recognition initiatives could prove very damaging to your customer loyalty and should be avoided at all costs because you run the risk of alienating both employees and customers.
However, since the research finds that engaged and satisfied employees correlate to engaged and satisfied customers, you can maximize both program benefits with one budget by devoting all your budget dollars this year towards optimizing employee recognition. You'll continue to enjoy the many benefits of your engaged workforce, while they continue to care for your clients in a way that will engender customer loyalty too. It's a proven and strategic approach to a challenging situation that should serve you well until the economy turns around.
—Michelle Smith, vice president of business development, O.C. Tanner
Do you have a recognition problem for one of our experts to solve? Send an e-mail to askrpiexpert@aol.com and we may feature your question and answer in the next "Ask the Experts" column.
Editor's Note: Read all of the strategies and best practices from Incentive's Survival Guide at www.incentivemag.com/survivalguide. New articles daily!
About the Experts:
Kevin J. Cronin is vice president of recognition and reward solutions at Perks.com. He is an expert on employee engagement to drive up business results and serves on the board of directors and marketing committee for Recognition Professional International.
Dee Hansford, CRP, is CEO of Dee Hansford Consulting. She is a respected authority in leadership development and organizational change resulting in measurable ROI. Her clients have received national recognition for award-winning programs supporting a higher performance work culture.
Michelle M. Smith, CPIM, CRP is vice president of business development at O.C. Tanner. She works in every facet of recognition and incentives and serves on the board of directors for Recognition Professionals International.
Peter W. Hart, CRP is president and CEO of Rideau Recognition Solutions, a global provider for corporate rewards programs. He serves as treasurer on the board of directors of Recognition Professional International.
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