B.T.W

By Eileen Yu

By the way, ZDNet Asia has more to say

Way to employee's heart isn't always cash

Posted in By The Way by Eileen Yu on Friday, February 27 2009 04:05 AM

Big old Microsoft faced some harsh criticism this week after it tried to reclaim excess severance pay that was mistakenly awarded to 25 workers. It eventually reversed its decision.

The company's HR department probably didn't imagine this accounting error would snowball into such a big public relations gaffe, but then again, businesses globally are operating in a highly-sensitive economic climate.

These days, layoffs seem the norm, headcounts have been frozen, bonus payouts are scarce, and discussions about staff promotions and pay increments aren't entertained. Most companies need to think of ways to reduce their spend and retain enough in their cash pool to sustain the company.

Unfortunately, because HR usually makes up the highest overhead in an organization, employees are one of the first things businesses look at when they need to cut their operating cost.

It's unfortunate because people are a company's biggest asset, and good solid talent is still hard to come by.

As a manager of my own team, staff retention and development is one of the things I think about all the time. I try to ensure that every valuable member in my team is given reasons, be it in terms of career or skills development, to stay loyal to the company.

Obviously, one of the best and most direct ways to ensure loyalty is very simply, hard cold cash. So, economic conditions like the one the industry is currently trudging through, makes this aspect of my job that much tougher.

But, there are ways businesses can help boost staff morale--and hence, loyalty--if economic circumstances don't allow them to do so through remuneration.

I started my career as a rookie reporter in 1998, right smack in the heart of the Asian Financial Crisis. The company I was with at that time faced similar market conditions as the industry is facing now--there were staff layoffs, frozen headcount and pay cuts abound.

So, I wasn't expecting very much when it came time for the annual salary review, especially since my company had announced there would be no pay increments that year. But, I was called into the office for a 1-1 meeting with my managing director, where he told me my pay will be adjusted slightly in recognition of my performance that year.

The increment was indeed nominal--just enough for me to buy a couple of friends one round of drinks. But, the fact was that he took the time to tell a young employee that she's done a great job, and that the company recognizes her as a valuable asset. I felt truly appreciated and was elated all the midnight hours I burnt slogging over my articles were worth it.

For me, that one simple act was enough to seal my loyalty to the company for another two years.

Employees are mostly an understanding lot. If their company is going through a rough patch when the economic tide changes for the worse, few workers would insist on getting salary increments or bonus payouts.

Whether this tolerance is induced by a fear of losing their rice bowl or recognition that it's now an employers' market, isn't the point here. What's important is that businesses should not exploit the situation or they risk losing their best talent once the economy recovers.

Employees are after all emotional homo sapiens, and can get especially edgy when they feel they're not getting just recognition for their work. When companies cannot afford to dish out monetary rewards to deserving employees, they need to look more closely and think more carefully about how they handle staff welfare and morale.

I doubt if the affected Microsoft workers were more upset about the money than they were over how the company handled the issue. It failed to explain why there was an accounting error and even added a line threatening monetary punishment if the money wasn't returned. Dishing out statements like that, particularly to workers they've just laid off, is surely uncalled for.

Disclaimer:
Views and opinions expressed in this blog are the author's, and do not necessarily represent those of ZDNet Asia.

Talkback 1 comments

Way to employee's heart isn't always cash
You are correct. Appreciation for effort will always go farther than cash. But I wonder how much longer your loyalty may have lasted if you'd been recognized for your hard work more often than once a year at your performance review. Frequent, appropriate, sincere recognition is critical to boosting employee morale at this time. We've seen it proven out. Our CEO was recently quoted on this:

"In a recession, the first thing that gets hit is productivity. As people worry about the economy and the stability of their jobs, recognition programs can help alleviate some of that worry. During these tough economic times when financial perks are being cut from budgets, some employers are turning to recognition as a way in which to keep employees happy. Recognition is a low-cost way of getting that return. You're filling a gap and boosting their feelings toward the company. Over the past three years, we've seen recognition grow as an important tool in HR, and in the past months, we've seen the rate increase even more."

I blog extensively on this topic of morale, productivity and recognition here:
globoforce.blogspot.com...
Posted by Derek Irvine, Globoforce on Tuesday, March 03 2009 06:20 AM

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About the blogger

Eileen Yu

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. These days, she gets stirred up over issues concerning Internet regulation, intellectual property rights and software patents, online privacy and data protection. Eileen is senior editor at ZDNet Asia, where she oversees the business tech news site.