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Weathering a recession with reward and recognition

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What can employers do in terms of reward and recognition as we face both a recession and rising inflation?

6th Oct 2022
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When people think of reward and recognition, they primarily think of financial reward – pay. But there’s so much more for employers to provide when seeking to recognise their workforce.

This is particularly important right now as ‘The Great Resignation’ continues, with strong competition for talent. This, coupled with rising inflation and a ‘cost-of-living’ crisis, means businesses are facing a unique challenge. It simply won’t be possible for all businesses to provide wage increases in line with inflation. Employees are technically facing a pay cut as they face soaring energy and food bills.  

Our latest research shows that 27% of employees are planning to leave their job in the next three months; 30% of employees are unhappy with their job and within the next three months, some 28% of employees are at risk of poor wellbeing due to their job. Stark figures indeed.

The partnership still has five ocean-going yachts, two golf courses, five country houses for partners to stay in and every club and society imaginable with generous subsidies

The John Lewis approach to reward and recognition

If businesses take a closer look at what drives employee engagement, they can reward employees in other ways, ultimately retaining staff, and creating a happy workforce.

It’s no doubt that when John Spedan Lewis founded The John Lewis Partnership, he was ahead of his time in terms of reward and recognition.  

Spedan Lewis wanted to share the rewards of owning the company with his fellow partners. He aimed to reward their individual efforts through a pay system that acknowledged individual performance and collectively shared annual profits as a bonus based on a percentage of everyone’s pay. Remarkably, he also allowed employees to indulge their hobbies and passions in the way a successful business owner would.

To this day the partnership still has five ocean-going yachts, two golf courses, five country houses for partners to stay in and every club and society imaginable with generous subsidies.

Spedan however, realised that reward went beyond a pay rate. He saw how his all-embracing approach to engagement built self-esteem. And to reward longevity of service and promote self-development, 26 weeks of paid leave is awarded after 25 years of service.

Applying the psychology to reward and recognition

Renowned business management psychologist Frederick Herzberg’s theory of motivation in the workplace is that pay and working conditions can only ever minimise an employee’s dissatisfaction with work. Neither pay nor working conditions are enough to promote satisfaction or engagement on their own merits.

Employees are motivated by a range of other factors but most notable, are responsibility, achievement, recognition, type of work and potential for advancement. If you want fully engaged employees, and to reap all the commercial advantages that go with it, you can’t just throw money at the issue.

People who are disabled are worryingly less happy with their pay than people who are not disabled

Reward and recognition is about acknowledging a job well done. Not to say people shouldn’t be paid fairly, this is imperative. To feel committed to an organisation, individuals have to take pride in doing their job. Become a business where people actively want to work and the workforce will willingly do more than is expected of them and go the extra mile. In turn, engaged employees will positively influence the behaviour of customers. Their excitement and enthusiasm rub off on the people they serve.

The WorkL Employee’s Voice Awards will, this year, recognise organisations that have consistently shown high levels of employee experience. Employees take the anonymous WorkL Best Workplace Awards Test and companies that score 60% or more will qualify as a finalist and are recognised as being a happy place to work, being rewarded with gold, silver or bronze status. 

We are seeing that reward and recognition strategies need to be ingrained in a company’s DNA, to drive discretionary effort and inspire a team to do more.

Dealing with the different demographics within reward and recognition

If we look at pay, our research has shown women become happier with their pay. When asked if they are fairly paid, today they score seven points higher than in 2020. It seems employers have had to react to the dismay of female workers over the ‘gender pay gap’. However, people who are disabled are worryingly less happy with their pay than people who are not disabled.  

We’ve seen a positive increase in women’s responses when asked if they are recognised when they do something well. In a year we have seen their score jump from 58% to 66%. Men have scored equally on this question however we again see a difference in scores between disabled people and non-disabled people. Disabled people score seven points less.  

Ultimately, businesses that reward their workforce are beneficial to the community and society as a whole

How to shake up reward and recognition

We’ve seen reward and recognition decrease year on year along with employee wellbeing. This is ultimately contributing to increased flight risk. So what can employers do to improve reward and recognition as inflation bites and businesses look to cut costs?

1. Encourage your team to speak about the ways they’d like to be recognised (there’s no one-size-fits-all) 

2. Create a culture that focuses on recognising good work

3. Ensure you communicate regularly with your team on their performance both in person and virtually

4. Establish time in your schedule to recognise good work

5. Be creative in ways you recognise good work

Well-thought-out reward and recognition initiatives coupled with a conducive working environment, help create sustainable, long-term businesses that can weather financial uncertainty. But ultimately businesses that reward their workforce are beneficial to the community and society as a whole. 

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