The Power of recogniTion To overcome recession fears

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As the news about the state of the economy continues in a nega-

tive tone, employees around the world are becoming more con-

cerned about job security as employers look to cut expenses while

maintaining performance. But these fears and cuts begin a cycle of

discontent that will be challenging to overcome once the economy

begins to improve. In the recent article “Psychological Recession,”

author Judith M. Bardwick defines the term as “an emotional state

in which people feel extremely vulnerable and afraid for their fu-

tures.” She goes on to explain the effect, “Chronically fearful peo-

ple are too exhausted to be creative and innovative. They expect

the worst to happen, so they see no reason to give their all.”

An ailing economy exacerbates these feelings, resulting in a greater

percentage of disengaged employees than during times of plenty.

In their 2007-2008 global workforce study, Towers Perrin reported

that almost four out of five workers are not performing at their opti-

mal level, with two out of five “checked out.” The impact on com-

pany performance is substantial. Companies with high employee

engagement show a 19.2% increase in operating income while

low-engagement companies show a drop of 32.7%. With a poten-

tial 50% differential in operating income on the line, engaging em-

ployees becomes critical for company success – especially when a

company is struggling for margins during an economic downturn.

impact of an ailing economy on employee Productivity

Today’s savvy employee knows no job is guaranteed, especially

when the economy turns sour. However, many companies are re-

porting simply making reductions in force is not a viable option.

After cutting resources deeply during the last downturn, human

resources leaders are now positioning themselves more strategi-

cally to ensure the company has the right people in the right jobs

when the market turns.

This strategy will help the company rebound more quickly than

those that did a less considered layoff. Employees have long mem-

ories. Those who make it through layoffs are often the most tal-

ented high performers companies want to keep. However, once the

market recovers, those employees will remember how the company

treated them and their less fortunate colleagues and may be the

first to consider leaving for a more appreciative work culture.

Using strategic recognition to reengage employees

As employees worry more about keeping their jobs, their ability to

focus on the job at hand tends to slip. Bill Catlette of Contented

Cow Partners and co-author of the Contented Cows book series,

recently commented: “It seems likely that an ailing economy will

cause many organizations to ‘lean down’ their spending in the tra-

ditional comp[ensation] and benefits areas for a while. We will be

more reticent than usual to add to the fixed cost structure. With

growing acceptance that a focused, fired up workforce really does

lead to improved outcomes, we will, however, likely see enhanced

focus on performance-based recognition and reward programs.”

These five critical steps can help you reengage your employees in

their daily activities and boost company performance during dis-

tressing economic times.

1) see your employees as assets, not costs.

Your employees are both assets and stakeholders in the success of

the company. By engaging them fully in their work, leadership can

2© 2008 Globoforce Ltd. All rights reserved

about globoforceGloboforce is the leading worldwide provider of on-demand strategic reward and recognition solutions for Global 2000 companies. Globoforce’s flexible and efficient recognition tool

can scale from one user to millions of users with ease, offering global companies a powerful and secure solution to implement and manage their companywide or divisional employee

recognition programs. Through a dynamic, easy-to-use, on-demand technology platform, Globoforce transforms the way companies engage, motivate and empower their workforces

across the world. Co-headquartered in Southborough, Mass., and Dublin, Ireland, Globoforce was recently selected by the Great Place to Work® Institute as one of the “50 Best Com-

panies to Work For.” Globoforce won a 2007 Process Innovation Award for the creative deployment of Dow Chemical’s global, on-demand employee recognition program. Globoforce

also won Human Resource Executive magazine’s coveted “Top HR Product of the Year” award in 2004 for its revolutionary on-demand software solution. Some of Globoforce’s world-

class customers utilizing this enterprise-class solution include Amgen, Avnet, Dow Chemical, Intuit, Procter & Gamble and Reuters. www.globoforce.com.

derive additional value from their efforts. Clearly define employee-

specific roles and expectations that are tied to overall department,

division or company goals. According to Martha Finney, author of

The Truth about Getting the Best from People, “People who are en-

gaged in their work are personally invested in your company’s mis-

sion-critical objectives, and that shows up in cutting-edge innovation,

unparalleled customer service and the kind of emotional resilience

that will withstand any storm your business will have to weather.”

2) Let your employees know they and their work make a difference.

In the stressful and uncertain environment created when economic

conditions take a turn for the worse, it becomes critical to reinforce for

employees the difference they make every day in helping the company

meet and exceed its goals. Communicate this effectively through a

strategic recognition program explicitly linking company values and

goals to the employee behaviors and actions being recognized. Fre-

quent and appropriate recognition helps employees see how their ef-

fort is delivering on company goals and mirroring company values.

3) counter employee confusion and discontent over actions such as layoffs or reorganizations with constant communication.

During an ailing economy when employees tend to focus more on

personal concerns for job security than on the task at hand, keep all

employees, not just your star performers, engaged in daily efforts by

communicating the reality of the situation, but with a tone of hope.

Delivering bad news honestly and in a straightforward manner helps

to ease fears. Communicating the objectives and vision of a company

during a downturn can provide a sense of security. Make your com-

mitment to your employees clear by keeping a strategic recognition

program in place and running smoothly, rewarding them for actions

aligned with the objectives and vision.

4) Boost performance through recognition when merit increases become cost prohibitive.

Consistent, appropriate and frequent recognition encourages employ-

ees to perform at a higher level. A University of Chicago study found

subjects working for a non-cash incentive increased performance by

39%, compared to those working for a cash reward who improved

by only 15%. The return on investment from a small recognition

budget—best practice suggests at least 1% of payroll—tends to be

considerably higher than the return from stretched annual merit in-

creases. After reducing annual increases to the minimum, companies

can reinforce the psychological contract with employees with a well

considered recognition program. Such a program feeds an employee’s

need for Psychic Income™, which is the additional value they derive

from increased social acceptance, self-esteem and self realization.

5) optimize strategy execution through reinforcement of effec-tive implementation steps.

A tough economy removes the cushion companies have become

accustomed to in times of growth. There is no longer any margin

for error or delay in executing on a company’s strategic objectives.

A recognition program based on the company’s strategy helps em-

ployees clearly understand the goals and encourages and rewards

them for effective implementation.

Are you in need of a program to reinforce your company’s strat-

egy to bring you through today’s slowing economy? Our experts

are ready to help you engage your employees through meaningful

recognition efforts that clearly communicate your commitment to

them and their success. Visit us on the web at www.globoforce.com

or email us at corporate@globoforce.com. To speak to one of our

global consultants immediately, please call: +1 888-7-GFORCE.