When the coalition government took up office last May it was keen to highlight a note left by former chief secretary to the Treasury Liam Byrne to his successor.
“There’s no money left. Good luck!” read the tongue-in-cheek message.
Many businesses will recognise the feeling of being left with little money to spend due to the recession. Some have had to make tough staff decisions, leading to lower morale and job insecurity.
Almost everyone has felt the impact of pay freezes, pay cuts or even redundancies in the past few years. But even in the eye of an economic storm the government and businesses must continue to progress on the cheap.
That is why Michael Rose’s A Guide To Non-Cash Reward makes such an interesting and useful read. Rose claims non-cash rewards are actually valued more than monetary recognition and managers can use them to great effect.
He quotes the words of infamous political manipulator Niccolò Machiavelli to show that money does not breed loyalty and hard work on its own.
“Friendship which is bought with money and not with greatness and nobility of mind is paid for, but it does not last long and yields nothing,” Machiavelli stated.
The key is to make staff feel appreciated through a programme of recognition and incentives. Formal recognition can consist of company awards, such as employee of the month or best newcomer. These could be allocated via a company awards night that would cost money but still provide a cheap way of boosting staff morale.
Informal recognition can be achieved by efficient personnel management and making staff feel appreciated through regular praise for good work.
To incentivise staff Rose says that spending a small amount on prizes for reaching targets is worth more in the long term than cash.
Sales teams use holidays and gifts as rewards for reaching targets just as much as they use money, and the memory of winning such a prize lives longer than anything purely monetary.
Rose even suggests financial incentives could have a negative impact in certain areas. He uses a Princeton University experiment to show that when incentivised with money people develop a tunnel vision to achieve the goal.
He argues that a narrow viewpoint can be bad in areas that require peripheral vision, such as creative projects. He also says people tend to focus on the cash incentive rather than the job itself, so incentives have to be constantly adjusted to make sure they do not distort employees’ actions.
There is also an interesting section on how to tackle absenteeism through non-cash awards. Public sector employees miss an average 9.7 days a year compared with just 6.4 days in the private sector.
To tackle this problem Royal Mail introduced a prize draw for staff with high attendance records. It has so far given away 37 Ford Focus cars as prizes and 74 employees have won £2,000 worth of holiday vouchers but absentee rates have dropped from 6.1% to 4.8%.
Perhaps a Ford Focus is too much to offer for a small business but more modest prizes could have similar effects if absenteeism is a problem. When times are tough, it is worth remembering there is more to motivating staff than money.
Review by Samuel Dale