When nearly 100 independent insurance brokers for American International Group (AIG) gathered at a posh resort in California last month as a reward for stellar performance, probably no one expected the event to make national headlines. But because the retreat came on the heels of a federal bailout for the company, the $440,000 bill – including $23,000 for massages and pedicures – sparked public outrage. AIG cancelled a second retreat.
The ill-timed celebration raises a question for other companies: What rewards are appropriate or possible during an economic downturn?
"Taking executives on a retreat is definitely not going to motivate employees who are frightened they are going to lose their job the next day," says Christi Gibson, executive director of Recognition Professionals International. But she emphasizes that this is not a time to abandon recognition. "During unstable times, recognizing employees is a great way to ease tensions. You can still have events and celebrations. They just need to be more personal and closer to home."
Companies spend an average of 2.7 percent of their payroll on recognition programs, Ms. Gibson notes.
"Rewards have their place when there's a budget," says Roy Saunderson, president of Recognition Management Institute in Montreal. "When you don't have a budget for rewards, you can still recognize people. Recognition reinforces the company's culture and values."
Although some businesses have cut back on recognition, more are staying with it, says Tommy Lee Hayes-Brown, a board member of Recognition Professionals International. "They realize making employees and customers feel good is important. It's the trickle-down effect. The boss makes the employee feel good, the employee makes the customer feel good. Then customers talk to other potential customers. That in turn helps to grow your business." He observes a trend away from "major, expensive, over-the-top" recognition and toward meaningful gestures that are less expensive.
Sometimes the most valued recognition is free, says Cindy Ventrice, author of "Make Their Day: Employee Recognition That Works." In a study last year, she asked participants to think of their most meaningful recognition experience and what it cost the company. Fifty-seven percent said it was free. Only 11 percent said the most meaningful recognition involved something valued at $1,000 or more.
"It completely surprised me," Ms. Ventrice says. "There is no correlation between the more you spend and the more value, the more meaning that is attached to the recognition."
At one Fortune 100 company, 96 percent of employees are satisfied with the recognition they receive. Yet managers "don't blow their budget on retreats," Ventrice says. "They may hold a luncheon or go out bowling or to a movie to celebrate, but it's not expensive."
Most workers like to be rewarded with time off, she finds. One company gives employees Monopoly-style "Get out of jail free" cards. Recipients can take an hour or two at their discretion. "Parents of school-age children may want to take off for a soccer game," Ventrice says. "Maybe senior members want to volunteer."
One firm, seeking to reward a valued employee, knew that what motivated him most was his family. "They had a family portrait of his children taken without him knowing," Ms. Gibson says. "This meant more than anything he had ever gotten in the time he had been with the firm. It brought him to tears."
Some companies contribute to an employee's favorite charity or a worthy cause. "Rather than everybody getting pedicures, do something for the community," Gibson suggests. "People love to give back, especially when there's a need. Spend time cleaning up a community park. It shows the company truly cares."
Mr. Hayes-Brown has seen managers wash cars when a team does a job well. "It's better than giving a car-wash gift certificate. Soap bubbles, water, and sweat don't cost a lot, but they're highly meaningful."
Bob Nelson, author of "1001 Ways to Reward Employees," remembers when his wife's company was going through hard times and could not afford a big holiday party. The couple offered to host a simple party at their house. They provided ham and smoked turkey. Others brought their favorite family recipe. "People said it was the best Christmas party they've ever had," he says. "It's very easy to fall victim to say, if we're not spending a lot of money we're not doing the right thing. But people will appreciate it more if they have a part in it."
Workers also appreciate a sincere thank you, expressed verbally or in a letter. The head of a group of spa and hairdresser companies wrote a paragraph telling what she appreciated about each member of her 40-person staff. "It was a reminder of their successes, achievements, and personal contributions," Mr. Nelson says. "She read those in front of the whole group. People cried and said, 'This is the best place I've ever worked.' "
Whatever form appreciation takes, Mr. Saunderson says, "Employees are more forgiving of awkwardly expressed recognition from a manager than they are of a manager who doesn't give any recognition at all."
Gibson sees it this way: "We need to look beyond ourselves during these times. Sometimes what has always been done needs to be revisited during a crisis, and companies need to try something new."