UK: Motivating Employees In A Downturn

Last Updated: 9 January 2013
Article by Robert J. Washington

The end of one year and the approach of a new one is a good time to reflect on past achievements and prospects for the future, but in the current economic climate a 'Happy New Year' may not mean profits, pay rises and promotions.

Although the UK economy has emerged from a second recession during the first two quarters of 2012, many businesses have not yet returned to pre-2008 levels of activity and turnover. As a result, the past few years have been tough for employees, with many experiencing year-on-year pay freezes or below-inflation pay rises, equivalent to real-term pay cuts. This article looks at other ways to keep employees happy during these difficult times.

Managing Communication

Managing employee motivation through communication is essential. As times worsen, employers can, understandably, become less inclined to share potentially damaging financial information with their own staff, for fear of leaks and a resulting loss of consumer confidence. However, disclosing some information to employees can actually improve morale, by contributing to an inclusive team spirit and motivating employees to pull together for the greater good.

There are a number of ways such information can be shared, depending on the size and structure of the organisation. Some employers use 'town hall' or similar 'all-hands' meetings to share news with employees orally. Such meetings have the advantage of personal contact with leaders, and by disseminating information in oral rather than written form, town halls also have the advantage of making bad news more difficult to pass on than an email or a memo (and, if we are being cynical, infinitely more deniable in the event of a leak).

Larger employers may not be able to hold meetings with their employees as easily. In those cases, a staff forum or works council can assist both as a sounding board and as a means of conveying information to employees.

When sharing information with employees, however, employers should do their homework and avoid painting a picture of doom and gloom where contradictory information or embarrassing facts are available by other means. Nothing is less likely to motivate an employee than learning of all-time-high executive bonuses whilst redundancies are threatened in the ranks.

Pay Rises and Bonuses

Pay rises have been relatively rare throughout the recession, for obvious reasons; once an employee has had a pay rise, they can expect to receive the same salary year-on-year, even if the business does not perform well. As a result, in times of austerity, employers are understandably reluctant to make pay rises.

As an alternative, bonuses are a way to share some of the employer's good fortune without committing the employer to future payments, provided the award and payment process is properly managed.

In some companies, formal bonus schemes are in place with targets and key performance indicators which must be triggered before bonuses will be paid out. Even if this is the case, a spot bonus or other one-off payment can often still be made. To do so, the employer should make it clear that the payment is made without reference to any contractual or quasi-contractual scheme which might also be in place. Christmas or end of year bonuses may be an obvious tool for motivating employees, leveraging off the spirit of the season and the clean slate represented by the New Year.

Holiday and Benefits

Additional holiday is another benefit which can potentially be provided relatively cheaply, especially if work levels are low, as allowing quiet employees a day off can be achieved with little or no actual cost to the business. However, employers should avoid locking extra holiday into employees' terms and conditions, as increased holiday levels could hamper productivity in future, when work levels return to normal. A Christmas close-down or a birthday-day-off, could be considered as one-off bonus holidays.

Employers could also consider what other benefits could be manipulated to provide greater benefit to the employee without incurring further costs. Increasingly, employers are offering 'total reward' pay statements showing the employee the full value of their pay and benefits. Some employers now also offer flexible benefits, allowing employees to pick and choose from a list of benefits up to the value of their total compensation, offering more customised cover for the employee, at no additional cost to the employer.

Non-Financial Incentives

If no cash is available at all, other ways to motivate staff should be considered. Many studies show that in fact, non-financial incentives can work as well, if not better than, cash in motivating employees in the workplace. In the modern workplace, employees, especially younger employees, now expect employers to provide more than just financial benefits to their staff. Concepts such as engagement in work, collegiality and career progression all play an active part in the makeup of the modern workplace, and playing on some of these more modern motivation factors can keep staff on board without excessive cost to the employer.


Lack of recognition is one way in which morale can slip among staff, especially when work is low and output may not be what it once was. In some cases, employers with a staff recognition scheme based on boom-time sales may find that their motivation tool is now lacking, and may wish to rethink this to provide for a more appropriate means of rewarding effort (for example, a scheme which rewards sales only could be modified to recognise pitches and tenders rather than pure sales).

For employers without an extant programme, ways of recognising achievement could include a regular award (say an annual performance award) or on-the-spot prizes for particular achievements. Prizes as simple as a bottle of wine or a small cash sum can be used to recognise achievement at low cost. At a simpler level, simply encouraging managers to acknowledge hard work by staff can make a difference to employees who feel under-appreciated.

Career Development

As the idea of a job for life seems increasingly outdated, employees are viewing their roles as stepping stones in their overall career progression. As such, a good motivator is to allow employees to develop their skills in their current role, which will allow them to progress in the future (hopefully within the organisation); even if current prospects for progression are slim.

Employers with in-house training facilities could consider deploying these resources to allow staff with capacity to do so to develop a new skill. If resources are scarce, another option may be simply to ask employees with certain skills to spend some time with colleagues for whom those skills would be beneficial, as part of a shadowing or mentoring scheme.

Social Activities

Finally, an effective method of promoting collegiality, and thus motivating employees, is to hold social events. Staff parties are something many businesses have reduced or even cancelled during the downturn, but social events can contribute to staff morale, providing the expense of the event is proportionate to the employer's financial position. If funds do not allow for a masked ball, making a small sum available as a contribution to a team lunch or drinks event can make a real difference to team morale.


Historically, many employers have relied on pay rises and financial incentive schemes to motivate staff to perform, which, however effective such schemes may be when there is more than enough work to go around, may not be effective during a downturn. In the current circumstances, employers without the financial means to make such incentive payments (or to make them at previous levels) should consider what other methods could be employed to motivate staff, and prepare a strategic plan to develop, and in some cases, rescue, their relationships with their staff.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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