six PRiNCiPles FOR mOtiVAtiNG AND RetAiNiNG emPlOyees iN A FlUCtUAtiNG eCONOmy AmeRiCAN exPRess® GlOBAl PRePAiD JUNe 2010 BACKGROUND

When the The economic downturn of the last few American Express recently conducted economy picks up, years has profoundly impacted many focus groups with a cross section of Human industries and businesses. Budget cuts, Resource (HR) professionals in small and my best people downsizing, and the elimination of raises mid-size companies to get their perspective and bonuses have had a dramatic effect on how the economic environment has will be the first on the nationwide. In the face impacted their and to learn ones to leave. 1 of budgetary cutbacks, companies may what tactics have helped them maintain neglect their most important resource – despite significantly their employees or “human capital” – at declining budgets. a time when their leadership is needed most to assuage concerns. Weathering the Many expressed concern that employees Storm – Lessons Learned: Straight Talk are feeling unappreciated. Employees from the World’s Top Business Leaders, are taking on extra responsibilities in the recommends that leaders “[m]aintain as a direct result of downsizing and, integrity and take proactive steps to in the current climate, their hard work is remove distrust and fear when emotions not being acknowledged. These most are running high.”2 Increasing morale valuable employees might be quick to should take precedence when employees move on once the economy turns and feel most vulnerable. more appealing became available. Additionally, they acknowledged the As many Human Resource (HR) difficulty in sustaining employee morale professionals know, neglecting employee especially post- downsizing and/or morale can have negative repercussions, pay freezes. particularly for small and medium- sized businesses. According to a recent Through conversations with these HR survey, 39% of people who left their professionals, we were able to uncover jobs cited insufficient recognition as a several innovative ways to motivate major factor in their decision.3 While employees and elevate morale in the economic and other factors can exist beyond workplace. What follows are six guiding management’s control, aspects within their principles to help you improve employee environment – like morale – should be morale and in your company. harnessed effectively and remain top-of- mind during turbulent times.

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 2 please contact us at 1-800-316-4420. Guiding Principle 1: Communication is key TALK TO YOUR EMPLOYEES AND LISTEN, TOO Employees need reassurance [from According to Accelerating Out of the If bonuses are being cut, openly Great Recession – How to Win in a Slow- discuss alternative modes of reward with management] Growth Economy, an “open system” of employees. Initiate dialogue about which communication for both good and bad rewards would be most meaningful to that the company news is most important during uncertain them. If you do not have definite answers is heading in the times: “In an information vacuum, to questions about if and when layoffs [employees] will connect the dots in the will happen or whether a salary freeze is right direction. worst ways imaginable. Leaders should forthcoming, you can still talk about what Communication hold team and one-on-one meetings to you do know. Simply stating that, as of encourage people to talk about what right now, there are no plans for layoffs is important … they are feeling (and should listen and that the company is doing everything they need to with empathy).” 4 it can to avoid them, goes a long way. In addition, speaking honestly about the understand what Public events, such as town hall meetings company’s financial situation and the you’re trying with face-to-face exchange, can be more realities of keeping the business viable effective at raising morale than one-way will be appreciated by employees. Every 1 to do. communications, such as e-mails or word spoken to address the subject helps memos. It’s beneficial for companies fill the void of speculation. to hold regular events that enable open conversations in which employees hear Effective employee motivation programs, directly from and ask questions of the implemented on both a personal and a CEO and/or management. group level, can dramatically improve company morale. In order to create a positive, productive working environment – one in which employees feel invested in and proud of their work – it is essential to connect with and motivate employees both collectively and as individuals.

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 3 please contact us at 1-800-316-4420. GUiDiNG PRiNCiPle 2: thiNK BeyOND CAsh the mOst OBViOUs GiFt mAy NOt Be the mOst PRACtiCAl employees are happy and Cash rewards are an obvious way to effectively drive employee motivation and are consistently ranked at the top of the list by HR professionals surveyed (Figure 1). motivated right These rewards are often given in the form of raises and bonuses. However, this after bonuses method of distribution can raise concerns around use, equity and frequency: are given out, Use: When a monetary reward is received within a paycheck, employees often but the positive 1. feel obligated to invest or save the money. Gift cards are often considered a better alternative because they encourage use for a personal purchase or a morale derived special experience. from that is Equity: Many times cash rewards and bonuses are unevenly distributed to very diffi cult 2. employees. Knowledge of this inequity often raises issues around employee to sustain. 1 expectations and fairness, which can damage employee morale. Frequency: Bonuses are usually given out as a one-time lump sum payment at 3. the end of the year. As a result, improvement in employee satisfaction is usually short-term and may not be a practical tool for sustaining employee morale.

Figure 1 tOP FiVe methODs UseD By hR PROFessiONAls tO imPROVe emPlOyee mORAle:

BONUses time OFF GiFt CARDs WellNess eDUCAtiON PROGRAms

Still perceived as Can reduce stress, Freedom to Decreases sick Encourages PROs the best way to improves life/work choose reward, time, shows that growth and affect morale. balance. rewards multiple you care for promotions. employees, can employees outside be personalized. of work.

Often unattached Need for coverage May incur service May not be for Can be a big CONs to achievement, while employee is fees, can expire. the majority of investment. employees feel out or productivity employees. that they have to is affected. invest. Rewards less employees due to cost.

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 4 please contact us at 1-800-316-4420. Guiding Principle 3: Prepare for the future WHEN THE ECONOMY TURNS, WILL YOUR BEST EMPLOYEES STAY? [S]etting a personal development goal Many of us have weathered the current economic climate by clinging to the belief [for employees] that a rebound is on the horizon. But from an standpoint, this can is motivational be a precarious strategy. An economic as it demonstrates upswing can mean more options for your employees. While there is no foolproof the plan for 100% employee retention, there is interested in are several measures you can implement the individual to keep your best people happy. and their long- Goal setting and employee development plans are effective tools for business 6 term career. growth, and can also contribute to both employee retention and workplace morale. A more comprehensive and extensive employee development plan forecasts a longer tenure with a company. Instead of a one-year development plan, consider expanding to a five-year plan that addresses long-term career goals. Ask your employees what they hope to have accomplished in five or ten years.

“Setting a personal development goal is motivational as it demonstrates the organization is interested in the individual and their long-term career. As part of the appraisal process, discuss the employees’ skills and longer term development needs and include these in their personal objectives.”5

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 5 please contact us at 1-800-316-4420. Guiding Principle 4: Be consistent, but also spontaneous HOWEVER YOU DO IT, SAYING THANK YOU GOES A LONG WAY Leaders need to celebrate success Positive verbal acknowledgement can go a basis. “It’s nice when a manager notices long way in helping employees understand you did something, but when co-workers and recognize the how much they are appreciated. While most notice […] it fosters esprit de corps – people look forward to bonuses, they are the spirit of a group that makes all the contributions of often expected annual rewards, unattached members of that group want to succeed.”5 individual team to individual achievement and without One effective way of communicating peer public acknowledgement. acknowledgement is to use gift cards as members who tokens of appreciation. “When people on have achieved Whether or not your company offers teams become highly supportive of one bonuses, frequent acknowledgement another, they develop a sense of oneness 4 results. of employees in a public forum can with a common concern for success.”5 successfully boost morale by demonstrating a direct correlation between effort and Armed with a common purpose, employees’ reward. “Leaders need to celebrate work may prove to be more focused and success and recognize the contributions efficient, but when each employee is of individual team members who have connected to a culture, work may even achieved results.”4 be inspired. Additionally, group events can communicate the message that your Gift cards enable spontaneous public company views employees as people acknowledgement because they motivate and not just assets. Taking employees employees to treat themselves, which in to local sporting events, hosting a turn can result in positive impressions of barbecue, initiating shorter work Fridays your company. Gift cards can be given in the summer, or even sponsoring not only at public events such as service a pizza lunch can increase workplace award dinners, but also as a spontaneous morale. The cost of an hour or two of reward for a specific accomplishment group entertainment or socializing is a or the completion of a project. Consider small price to pay when one considers implementing a “surprise and delight” the productivity gains that come with program in which HR professionals and/or increased morale. supervisors keep gift cards in their desk drawers for on-the-spot recognition.

According to Creating Passion-Driven Teams – How to Stop Micromanaging and Motivate People to Top Performance, an essential component of motivating employees involves by the people with whom they work closely on a daily

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 6 please contact us at 1-800-316-4420. Guiding Principle 5: Treat people like people HELP SUSTAIN THE LIFE/WORK BALANCE The key to motivational No one wants to feel like just a number. Setting up seminars that address Unfortunately, layoffs or even the fear of retirement planning or education funding management layoffs can have a dehumanizing effect on shows that you are sensitive to the employees. But there are a variety of ways challenges your employees face in achieving is to align your to remind your staff that you think of them goals. This is especially important if you employees’ as people who have lives that extend beyond have had to suspend or curb a bonus or the company. Sending such messages in promotion program. needs closely the workplace can have a dramatic effect with those of the on the perception of a company. Additionally, providing wellness seminars 6 and presentations, covering anything from organization. According to Essential Managers: nutrition to stress management, shows that Motivating People, businesses need to you are genuinely invested in the quality of achieve their goals and targets, however, the your employees’ lives. Perhaps they might people who work for them have their own be interested in a weekly morning yoga needs, which can’t be ignored. “The key to class, or a smoking cessation or weight-loss motivational management is to align your program. Consider creating a suggestion employees’ needs closely with those of the box to find out what types of activities are organization.”6 important to your employees.

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 7 please contact us at 1-800-316-4420. Guiding Principle 6: The freedom of choice REWARD WITH GIFT CARDS All gift cards HR professionals cited gift cards as one of aren’t the same. ® their top five tools for increasing employee American Express Gift Cards are There are those morale (Figure 1). They were seen as a great employee reward that can only an essential component of a company’s overall recognition program, and a more Benefits for employees be used at individualized and spontaneous alternative • Accepted at thousands of US locations to cash rewards such as bonuses and raises. • No fees specific stores In addition, the ability to personalize the • Funds on the Card do not expire while others gift cards with the employee’s name and/ or the company logo made them a more Benefits for employers can be used thoughtful reward. anywhere. 1 • Customizable (logo, image A distinction was made between the value or personalization) of network branded gift cards (open-loop) • Available in denominations from vs. store brand gift cards (closed loop). $25 to $3,000 Open-loop gift cards like the ones issued • Can be ordered online, up to $75,000 by American Express are preferred because in a single order they give the recipient the freedom to choose how he or she wants to spend the gift (e.g., gas, clothing, groceries, online). Providing freedom of choice increases the likelihood of enjoyment and ensures that a gift card won’t go unused.

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 8 please contact us at 1-800-316-4420. final note

When the economy does come around, increasing the frequency and amount of employee rewards can help send the message that everyone is sharing in the growth. If there is not yet sufficient funding to restore a bonus program, you shouldn’t overlook this crucial time period for employee recognition. American Express Gift Cards, available in denominations of $25 to $3,000, are the perfect way to reward employees whether the economy is on hold or flourishing.

Hopefully these guiding principles can help all of us weather the economic storm together. These years have not been easy for businesses, but the recession has challenged employee motivation and morale, and has illuminated its need. With a little creativity and flexibility, you might find that you can get more out of your current HR budget than you ever have before.

Order Gift Cards at americanexpress.com/gift. For questions regarding our prepaid products, 9 please contact us at 1-800-316-4420. BIBLIOGRAPHY

1. “A Qualitative Research Study on Employee Morale and Motivation: Incentives.” Survey. 09 March 2010

2. Fifty Lessons. Weathering the Storm – Lessons Learned: Straight Talk from the World’s Top Business Leaders. Cambridge, MA: Harvard Business Press, 2009

3. “Employee & Retention Survey.” Survey. Salary.com. February 2009

4. Rhodes, David and Stelter, Daniel. Accelerating Out of the Great Recession – How to Win in a Slow-Growth Economy. Boston, MA: McGraw-Hill, 2010

5. Bobinski, Dan. Creating Passion-Driven Teams – How to Stop Micromanaging and Motivate People to Top Performance. Franklin Lakes, NJ: Career Press, 2009

6. Talwar, Saloni, ed. Essential Managers: Motivating People. New York: DK Publishing, 2009

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