You know what assuming does, right?

At the time (15 years ago) I thought the immediate reaction to an economic downturn was that no one in their right mind would want to invest in my company's solution: Recognition & Rewards Technology. Rather, the focus would be on preservation of funds and not investing in new programs that didn't directly influence sales.

I learned some valuable lessons inspired by HR executives and CEOs. Valuable lessons that keep me inspired coming up on almost two decades in the HR ecosystem and feel privileged to be able to share.

4 lessons I've learned (And why R&R is a must-have during these times) 

For nearly two decades, I've seen the influence that a sound recognition and rewards strategy has on driving positive people and organizational results in normal times, but even more so during difficult times. There is a lot of volatility expected in 2023 on the heels of (and on the wave of) an economic slowdown, and I wanted to share some of the things I've learned.

1. Smart companies double down on employees when the going gets tough

When many companies look to cut costs that positively influence the employee experience, forward-thinking organizations look to invest. As we ask employees to do more with less and bear the uncertainty in their own jobs and current situation, employee retention becomes critical.

The answer (and truth) I've received from savvy executives quite often is that "it is more cost-conscious to retain employees" than to lose them, or lose and rehire them in the future.

We're all well aware of the costs involved in employee turnover. The cost of replacing an individual employee can range from one half to two times the employee's annual salary — and that's just what can be calculated in recruiting and onboarding costs, training costs, and the like. And that doesn't even include the lost institutional knowledge and cultural impact.

I've witnessed countless times organizations invest in recognition and reward strategies to build a better employee experience in tough times to show appreciation for herculean efforts, especially with the understanding that recognition is one of the largest drivers of employee engagement and retention.

But a sound R&R strategy has other financial benefits too…

2. Consolidating rewards spending saves companies money during uncertain times

When you peel back the layers of the amount a company invests in ad hoc rewards programs across the organization, you start to realize the cost is greater than anticipated. I've conducted these types of analyses with numerous organizations and that's always the case. Typically:

• Some reward spend is tracked like Years of Service programs and awards
• Some are lightly tracked in on-demand rewards throughout the year
• Many are untracked and buried in budget line items
• Some are driven through HR, but many are incentives driven through other departments

During economic unrest, smart organizations implement new recognition and rewards strategies with the outcome of an improved culture of recognition while at the same time saving the company money. By thinking holistically about the recognition and rewards landscape, and consolidating rewards with one aligned platform and one currency (i.e. points),  comes with several benefits:

• Ease of traceability and accountability on reward spends
• More security and less waste (how many times have you looked for those gift cards sitting in a drawer at some point?!)
• Common currency and equity of rewards opportunities across all employees
• Easier to quantify ROI

Beyond the benefits listed above, companies also benefit from sending more frequent, lower-value rewards (instead of larger ones less frequently) that supports the culture of recognition that is so critical to the employee experience.

For example… you can look at your holistic rewards budget, cut it by 25% and have smaller rewards that accumulate over time (typically only possible with a points-based platform) that offer more rewards and recognition moments. Many companies will look at their large Years of Service budget where you take recognition once every five years to a more impactful experience with peer-to-peer recognition.

3. Fostering connection to build resilience has tremendous value when there's a slowdown

At times of uncertainty, employees feel apprehensive and start becoming disengaged right at the time when the highest levels of engagement and alignment are needed. Beyond the constant needs of communication, listening to employees, and supporting alignment, it's also important to foster a culture of recognition to amplify what's important and build positive connections and relationships.

Even if employees aren't navigating an economic downturn for the first time, they're most likely new to doing so in a remote/hybrid workplace. Employees have been void of connection since the pandemic and consistent moments of peer-to-peer recognition support a feeling of belonging. And it's not just the folks being recognized and the recognizers. In many conversations, I have found that even simple exposure to public recognition builds connection not only to other colleagues, but important values or the mission of the organization.

4. Incentivize behaviors that matter to your company NOW

Connecting to colleagues and a company's purpose is critical, but I've also realized the most successful organizations focus their efforts on very specific outcomes to support immediate impact and success.

The concept of incentives is a critical component of the R&R equation that often gets overlooked. Recognition is typically based on conducting behaviors aligned with values, whereas incentives are linear: do X and get rewarded with Y.

Let's be honest, when it comes to this economic downturn, there are some outcomes that we want our employees to focus on more than others. Examples I've seen from different organizations are:

• During economic uncertainty
  • Saving company money: Reward employees for focusing on negotiating or cutting costs
  • Referrals for hiring: If companies are hiring, referrals are much more cost-conscious (and more successful typically) than recruiters
  • Business/Sales leads or introductions: Support top-line growth
  • Wellness initiatives: Focus on the individual that is likely suffering from uncertainty or burnout

• All the time: Here are just a few examples of successful incentive programs I've witnessed:
  • Learning & Development initiatives
  • Process improvements
  • Social giving and impact initiatives
  • Safety
  • Hitting goals

Read more: Employer/employee workplace experience ratings show the gap is closing

It's hard to deny the impact that recognition and rewards have on building better employee experiences and supporting the intrinsic and extrinsic motivators of our employees. During times of uncertainty, having a sound recognition and rewards strategy is essential in appreciating the efforts of our employees and building critical connections. Such a strategy also comes with complementary benefits that offer cost savings and drive key outcomes to help companies navigate through these times.