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Maximizing the value of benefits in a recession

May 13, 2009

Cash no longer flows as freely as it once did, and employers are responding. Many employers have cut back on funding retirement plans and other benefits. Many employers have cut back on staffing levels. Many employers have cut back on both.

However, all employers want to come out of this recession ahead of their competition. History indicates that a workforce focused on achieving the next goal, rather than dodging the ax, will help an employer win. This puts pressure on human resource managers in the classic dilemma of keeping morale high while cutting employee security.

Fortunately, most people value more than just cash and have the ability to do so in the workplace just as well as other parts of their life. Tapping into those values offers a source of low cost morale raisers. In this article, we outline a few ideas for motivating a workforce without a large outlay of cash. 

Teamwork works

Focusing your workforce on company goals not only increases the efficiency of your productive effort, but can also improve morale. Employees can figure out how or why they are on the winning team, increasing their sense of security. And to the extent they participate in that success, employees often develop a sense of job satisfaction.

Holding a contest to see who can generate the best idea for improving profitability gives your workforce the opportunity to give their input, participate in the process, and be rewarded. The company pays for the cost of organizing the contest and whatever prize incentive is offered. The contest may stretch firm-wide or vary by unit. And if all works out well, the company will profit from the endeavor.

Offering opportunities for employees to invest in the company could also unite employees in the interest of making the company profitable. This familiar technique can be offered for the relatively low cost of equity dilution, but may have a more beneficial result.

Less aligned with company profit but still a good team building tool, group charity efforts draw on employees’ sense of values. In this time, employees probably have a heightened sense of their fortune, considering their employment, and contributing to their community allows them to feel like the community will be there for them should they experience a time of need. While employees may not have cash to contribute, they may be willing to contribute time, especially if their employer is willing to allow some time for them to participate.

Career guidance

Given the severity of this recession, many companies are reconsidering the direction of their business. Necessarily, this involves retooling their workforce. Promising employees may see opportunity in changing with the company. So, for the maximum cost of retraining such employees, the company gains the option of preserving valued human and intellectual capital and does not have to take the risk of bringing unknown workers on board. 

In order to bring about this effect, companies must first illuminate the possibilities. At the basic level, this ensures that all employees are striving for the right goals. But it also ensures that an employee who sees a potential business opportunity will consider developing it at their current firm rather than starting their own firm or jumping to a competitor.

Employers have several low cost options for assisting employees with the transition to a new business direction. To the extent an educational assistance program already exists, the employer can refine it to motivate appropriate development. This may involve additional help in critical development areas or restricting assistance to where the company has a need. The company may offer employees opportunities to learn new skills on the job, by splitting responsibilities between old and new endeavors or by offering internships in the new field. Finally, the company may support the employee in attending professional seminars or networking events that allow the employee to pick up new skills and learn about the new line of business they are helping to develop.

Give them a break

A job represents only a portion of a worker’s life.  Lifestyle benefits, by definition, make it easier for workers to integrate their jobs with the rest of their lives. Depending on the job and lifestyle benefit, the cost of such a benefit may run as low as a bit of administrative difficulty. However, the return on such benefits may include more refreshed employees, less absenteeism, lower office maintenance costs, and more interesting, vital employees.

Traditional lifestyle benefits include paid time off, less formal dress requirements, flexible work schedules, and remote access to work. In the last six months, some employers have begun to consider compressed work weeks, which have benefits similar to remote access and paid time off. Employees have one less day to commute and one more day with their families and friends. Particularly where employers can arrange to close a location for the day, the company may save on energy and other office maintenance costs.

An employer might also experiment with allowing partial or unpaid time off, to smooth rapid fluctuations in their need for labor. Suppose, for example, that an employee has a cyclical work pattern which has slowed for a week or two. Without the option of taking off at lower pay, an employee may come in, take space and resources, burden his or her manager with a search for something to keep the employee busy, etc. With the option, such employees may decide they would rather spend the additional time taking a vacation, working around the house, or perhaps even learning new skills that could be applied at their job when they are needed more.

A company might also offer a number of ways for employees to save money, without actually spending much of its own cash. Naturally, this includes discounts on its products. Offering employees first crack at purchasing old office equipment or furnishings may reduce the cost of disposing of such materials. The company may be able to use its size or position in a community to negotiate discounts for employees at local businesses, like restaurants, cleaners, and health clubs. The latter brings with it the ability to tie in the company’s wellness program, making it easier for employees to maintain a healthy lifestyle while employed.

Make the most of what you have

Many of the opportunities listed above probably already exist at your company. However, for various reasons, your company may not be getting as much value out of them as it could. Our final suggestion would be to make the most of whatever benefits you offer by ensuring that your employees know about them and how to make use of them.

Raising awareness of existing benefits applies to any program, not just the ones listed above. Employee Assistance Programs (EAPs) are a good example of a benefit that commonly go unnoticed but may have usefulness in today’s environment. Employees may use such programs to cope with the stresses of today’s economic environment or figure out that they want to exploit new opportunities presented by a change in their business.

Employers have long lamented the lack of recognition that their defined benefit programs get. But the current market environment provides an outstanding opportunity to show how valuable the pension promise is to an employee’s retirement portfolio. When the pension benefit is added to an employee’s retirement income picture, the drop in defined contribution accounts are less (but still) significant, especially for those near retirement. Even frozen defined benefit plans have value – perhaps more so at this time since they may be overlooked by employer and employee.

The key to making the most of the benefits you already have could lie in an effective communications campaign. Communicating not only what the benefit is, but how employees might find it useful in the current economic climate may build as much goodwill as offering a whole new benefit. It also helps to ensure that you are getting as much value as you can for the benefit dollars you spend.

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Employers have the ability to gain some value from benefits without spending a lot of cash. By stepping back to observe what employees value and what resources already exist, managers can put together a program appropriate for the current economic environment and aligned with the company’s direction. While some employers may be satisfied to keep their workforce feeling like they are lucky to have a job, others may try to include their workforce in their comeback from the recession.

The idea for this article came from questions our clients asked us. We believe there are many more ideas out there, and would like to help all of our readers benefit from sharing them. If you would like to contribute to the discussion, we invite you to submit your own ideas for benefits that do not strain cash flow. What have you done to improve morale over the last year? If we receive enough submissions, the responses will be published in the form of another article. All contributors will remain anonymous.