The value of your rewards and recognition program during recession

November 02, 2011
The value of your rewards and recognition program during recession

When recession hits, businesses look for ways to save while they see out the storm. It’s an obvious reaction, and one that makes sense. It is wise for management to act prudently and trim the company’s sails during stormy weather.

But there’s a big difference between prudent cost cutting and the kind of knee-jerk reaction that occasionally happens when company presidents hit the panic button. When this happens, it’s often HR that’s right in the line of fire—tasked with finding strategies to cut costs. Oftentimes senior management will target recognition and rewards programs as an “easy” way to cut costs. But as an HR professional you know that dismantling the rewards and recognition program will do more harm than good. So when you’re president asks you to validate the rewards and recognition program at your company, here are five reasons you should offer that illustrate the importance of recognition and reward.

1. It goes without saying that any company announcements about cost cutting will cause a dip in morale. And any cuts that directly affect employees will worsen the dip.

2. When morale dips, voluntary overtime quickly follows. Many companies rely on the conscientiousness of their employees and the hours of voluntary overtime that ensure projects get finished on time. But when employees feel their rewards are being eroded, the reaction is often to do less, and the beginning of a combative situation.

3. Hand in hand with working less, comes a dip in the quality of workmanship—again as a direct response to the perceived injustice of having benefits cut.

4. All of this will obviously lead to a drop in production, compounding the issues already introduced by the economic slowdown.

5. And last but by no means least, your company’s reputation as an employer will be compromised, meaning when the upturn in the economy arrives, you will be unable to attract the top talent you once did.

All together, this represents a powerful argument in favor of retaining your existing or even introducing a new loyalty and rewards program—one that ensures your company is able to continue producing the highest-quality products or service, even during times of recession.

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