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During the recession of 2008-09 and the slow recovery period that followed, many employers made deep cuts to rewards and recognition programs—or eliminated them. As the economic picture began to improve over the last six months of 2011, however, employers throughout the U.S. took the opportunity to reconsider and, in some cases, reintroduce recognition programs. Experts say the latest trend has employers seeking ways to use these programs to improve and enhance employee engagement.
“Rewards programs have traditionally been viewed as a discretionary expense. … Therefore, the programs have always been vulnerable to economic downturns,” said Steve Gross, a senior partner with Mercer Human Capital Consulting’s Philadelphia office. “Now that the economic picture is a bit brighter, many employers once again have their hands on the cash spigot and are looking to bring rewards programs back—but now with the primary focus of improving and driving employee engagement.”
As with any business buzzword or phrase, “employee engagement” often is misunderstood by employers. While improving employee engagement sounds good, employers should have a firm grasp of what the term means and what is required to achieve high levels of engagement. Gross says his definition of the term is fairly easy to understand and something employers can monitor. “I define employee engagement simply as going above and beyond the requirements of the job,” he said.
Employees who are willing to go the extra mile are in demand and are more likely to be targeted for recruitment by competitors. As the economy and job market improve, companies that reduced or eliminated their rewards and recognition efforts during the recession are reinstituting such programs to keep their best workers from finding employment elsewhere.
Yet one of the key challenges in this process is rebuilding and re-instilling trust with employees who might feel undervalued and unappreciated.
“Many businesses say that employees are their No. 1 asset. However, the acid test for employers is how they treat employees during down economies,” said Joe Bohling, senior vice president for Aflac Inc. in Columbus, Ga. “We are committed at Aflac to reward and recognize our employees for doing a good job, even through the tough economic times.”
Bohling says that employers like Aflac have a tremendous advantage when it comes to attracting, hiring and retaining top-level workers because the company continued to reward and recognize employees for outstanding work even as the economy sputtered and stalled.
“The payoff is that we have a very loyal staff and have kept a very high level of customer satisfaction during a very rough economy, when many of our competitors really struggled to stay afloat,” Bohling said.
Bohling and Gross say they understand that in most cases the decision to cut back or eliminate rewards programs is out of the hands of HR. However, they agree that business pressures to reduce costs can be shortsighted. Employer perceptions of rewards programs need to shift away from the question “How much does it cost?” and move toward “How much can these programs provide in return?”
Gross said many employers have begun to make this attitude shift, and that rewards programs focus increasingly on the link between employee engagement and improved work outcomes.
“If we look back five years ago to 2006, and prior to the recession, the emphasis was on attracting and retaining the best workers,” Gross said. “Employers were asking ‘How should we structure rewards programs so that we retain the people we need to keep?’ ”
In 2011, budgets available for rewards programs were much tighter and, according to Gross, employers searched actively for the best ways to squeeze the most value out of available funds to keep employees engaged and dissuade them from seeking other employment as soon as the job market improved. “In 2011, it has been all about the most effective use of tightly budgeted resources,” Gross said.
A Brighter Future
The prospects for 2012 look brighter, experts say, with a new focus on the return on investment for rewards and recognition programs. By investing in programs that reward workers for improved work outcomes and going above and beyond their normal job responsibilities, employers can make great strides toward their key objective of building an engaged workforce.
HR professionals are in a unique position to take the lead in such efforts by demonstrating how rewards and recognition programs can help businesses attain this goal, according to Bohling. “By doing their homework, HR can show that these programs can have a great return on investment through reduced employee attrition, improved productivity and increased customer satisfaction, which all relate directly to the bottom line,” Bohling said. “With these numbers, you can build an excellent business case and justification that rewards and recognition programs are well worth the time, effort and money invested.”
Bill Leonard is senior writer for SHRM.
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