Budgets are tight – how can I recognise and reward my staff?

Recognising and rewarding top performers is a trusted strategy to motivate future performance. Along with proven engagement and retention benefits, offering annual pay reviews and rewards allows you to acknowledge the results or behaviours that help your organisation achieve its objectives, which incentivises future similar behaviour. In the recent Hays Salary Guide salary as the number one benefit that employees were looking for at 71 per cent.

In this year’s Salary Guide it appears that employers are indeed willing to reward their staff, with 86 per cent of organisations planning to give raises – although this is down from a high last year of 95 per cent. Dig deeper and the increases may also be out of step with employee expectations. While 50 per cent of companies expect to give an increase of three per cent of lower, some 61 per cent are expecting a raise of six per cent and above.

So, when budgets are tight, how can you reward your employees? Regardless of how well-deserving they are, if the money isn’t available then the bonus or pay rise an employee may have otherwise expected can no longer be given.

It’s at times like these that managers can be left unsure of how to reward employees. The good news is that, for many employees, the ‘emotional’ salary component is just as important as the monetary element in a compensation package. In fact, many employees prefer non-financial forms of reward.
In this year’s salary guide it was obvious that learning and development is high on the list of benefits wanted – three of the top five ways of providing benefits were linked to upskilling, as you can see in the steps below.

What is an emotional salary?

Emotional salary is a term used to describe the non-financial benefits and intangible factors an employee receives that have a positive impact on their emotional and psychosocial state, such as a positive work environment, flexibility, a good work-life balance, opportunities for training and development, a supportive and caring manager and a sense of belonging.

The fact that emotional salary components can go a long way and often cost less than financial rewards doesn’t make them any less effective. In reality, the opposite is often true, since offering additional non-financial benefits that contribute to overall job satisfaction and wellbeing results in a more considered and personal approach and is therefore a more effective way of rewarding and recognising staff.

Offering a strong emotional salary has many benefits for employers, too. Employees who feel valued and supported are more likely to be motivated and engaged in their work, improving job performance, productivity and retention.

Here are 9 ways to recognise top performance when budgets are tight:

1. Create bespoke solutions

It’s important to identify and recognise what motivates each individual employee. Ask for feedback from each employee to ensure the rewards you offer will motivate them. Have a conversation with your employees and ask them to identify the emotional salary components they would prefer.

You can then personalise the emotional salary offering based on the motivations and preferences of each individual employee.

2. Say ‘thank you’

A genuine and heartfelt ‘thank you’ can be highly motivating and make an employee feel appreciated. There are different degrees of recognition though, so decide which will work for the employee in question. For example, some employees find it very satisfying to receive formal public recognition, while others prefer a deliberate ‘thank you’ in a smaller team or one-on-one meeting. A team email or thank you note are other options that allow you to acknowledge an employee for their hard work. Annual awards that single out top performers have the dual benefit of rewarding performance while also inspiring other employees to do the same.

Regardless of the method you select, expressing your gratitude for their efforts and acknowledging the value they’ve added to the team or organisation demonstrates that you’ve not only noticed their success but value their contribution. It shows that you understand their effort is worthwhile and important.

3. Work-life balance improvements

From the right to disconnect to additional annual leave, work-life balance is high on employees’ agendas. Improving work-life balance can significantly contribute to enhancing employees’ experience and allow you to recognise staff when budgets are tight.

There are many work-life balance improvements that can enhance employees’ working experience, including offering flexible working hours, more than 20 days’ annual leave, hybrid and remote working and physical and mental wellbeing programs.

The right to disconnect is gaining attention with some governments even mandating the employees right to not communicate or perform tasks outside of their normal working hours.

4. Career progression

Many employees are motivated by career advancement, so offering the opportunity to co-design a career progression plan to reach their goals is another way to recognise outstanding performance. Sitting with an employee after their annual review, for instance, to determine how they can position themselves for a future promotion can be very meaningful. It shows you are invested in their future, while acknowledging their strong performance in real time.

5. More challenging tasks

Not everyone is motivated by a promotional pathway though. For other employees, the opportunity to work on more challenging or varied work and expand their skills may be more meaningful. Or perhaps you could consider giving them the opportunity to lead a project or scope out an identified opportunity for growth.

6. Merit-based promotions

It’s important to continue to acknowledge and action merit-based promotions, even when budgets are tight. Merit-based promotions demonstrate that you value an employee’s hard work and support their career growth.

While you may not be able to offer a pay rise, you should still honour any pre-arranged commitment to promote an employee who has met the targets and objectives required to qualify for advancement. Failing to keep your word by not recognising such successes could demotivate an employee who has worked hard to be eligible for a promotion and may create an engagement and retention risk.

Furthermore, it could have wider-reaching effects, such as by harming your employer brand and reputation in your market.

7. Learning and development

No one wants to feel that their skills are stagnating. Therefore, offering ongoing learning and development opportunities can be a great way to reward top performers and enhance their emotional salary. There are various ways this can be achieved, such as through upskilling, coaching, a mentorship, the chance to sit in on important meetings, cross-collaboration with another department or a stretch opportunity.

Taking on new responsibilities allows you to reward an employee in a way that will help their long-term career growth. They can learn new skills, hone others and gain exposure that will benefit their promotional prospects or help them do their existing job even better. At the same time, you can encourage the development of skills that are in short supply within your team, thus helping you to overcome any skill gaps, which is a win-win for both you and your employee.

This year learning and development seems more valued than ever, with three of the top six benefits identified in the Salary Guide being linked to training:

Pay increase 71%
Learning or developing technical skills 63%
Being able to work more flexibly 54%
Learning or developing soft skills 45%
Learning or developing digital skills 43%
More challenging or exciting work 42%

8. Flexible working options

Flexible working options are very important to today’s skilled professionals. While most desk-based employees currently work in a hybrid or remote way, the concept of ‘flexible’ extends further.

You could, for instance, consider rewarding a top performer with flexible working hours, which allows them to change work hours outside of core business times within certain parameters. This can vary based on the needs of the organisation and employee, but often includes compressed working weeks, such as compressing a five-day week into four days, flex time, flexible leave options, part-time employment and job sharing.

While not all workplaces can offer all these strategies, for those that can it is a strong benefit you could provide in lieu of financial recognition and reward to enhance employees’ emotional salary.

9. Additional annual leave

Receiving additional paid time off can be highly rewarding, after all, if time is money, then this could be an ideal middle ground when financial rewards are unavailable.

You could, for instance, offer a top performer the opportunity to take an afternoon off or have a long weekend. Offering an additional day or two of annual leave each year is another option. Such staff rewards help your employees feel that their efforts have been recognised while giving them an opportunity to rejuvenate, which is particularly important if they’ve just completed a complex or all-encompassing project.

Final points to keep in mind

Employers who provide competitive benefits as well as remuneration create a positive and supportive work environment and improve employee wellbeing, job satisfaction and retention.

They also gain an attraction advantage. In today’s tight talent market, candidates look for jobs that will contribute to their overall wellbeing and happiness. While salary is an important factor when choosing a job, an employer who also offers desired benefits beyond money can help secure a desired candidate.

In fact, a candidate is likely to select a job with a strong emotional salary and a little less money over one offering more money but a poor emotional salary. They understand that the intangible benefits can contribute significantly to their overall personal and professional wellbeing and satisfaction.

About this author

Jane McNeill, joined Hays in 1987 as a trainee recruitment consultant in London and is now Managing Director of Hays NSW and WA.

After two years with Hays Jane began managing her own office and quickly took on larger and more diversified teams of people and responsibility for a region in the UK.

In 2001 Jane arrived in Perth , Western Australia and shortly after took over as State Director for WA. After six years of significant business growth she was appointed to the Hays Australia & New Zealand management board in 2007.

In 2012 Jane moved to Sydney and now oversees Hays’ operations in New South Wales with board responsibility for Western Australia.

Jane has an MA in Psychology from Edinburgh University.

Follow Jane on LinkedIn