5 Ways to Reward Employees When You Can’t Give Raises

Whether you have two employees or 200, it happens to almost every leader at some point: a person asks for a raise and you have to say “No.”

For many small business owners, turning someone down is not a matter of poor performance or miserly management; they simply can’t afford to raise wages.

While money is obviously ideal for your workers, there are some other ways you can show your appreciation for their efforts and reward hard work and a positive attitude. (This is especially true for millennials, who really value incentives for employees such as travel and charitable giving.)

If you can’t give raises this year, try implementing one of more of these employee perks:

1. Put in a bonus plan.

   By giving individuals control over their success, you bring out their best and set them up for personal and professional growth. Yes, this is something you want to do anyway, but offering them a reward for great performance is going to encourage them to aim higher than ever.

   There are several ways to structure bonuses, from quarterly payouts based on the company’s profitability to tying them to individual or team targets.

   A bonus not only boosts an employee’s bank account, it lets them know you recognize what they’ve accomplished are willing to compensate them for their performance—it’s the next best thing to a raise.

2. Offer flexible work options.

   Consider giving high-performing workers the freedom to work from home on Mondays, or to work four 10-hour days instead of five 8-hour days and take Fridays off.

   If you can’t offer them a full day at home because of frequent in-office meetings or IT issues with accessing systems remotely, you could allow them to choose an 8 am, 9 am or 10 am start, for example.

   Your staff will greatly appreciate having extra time to spend with family and friends, and they’ll be more refreshed and productive thanks to a better work-life balance.

3. Provide educational opportunities.

   These employee perks offer a win-win situation: you show the person that you’re invested in their future, and they gain knowledge which they bring to the workplace. This can tie in nicely with a person’s performance review, when you’re asking them what their goals are for the next year.

   Have a conversation about what a star performer wants to learn or achieve and create an education/training plan that works for both of you.

   Some examples I’ve seen companies offer partial or full reimbursement for a degree program, certifications, college classes, conferences and books.

   I’ve even put together agreements where the employee agrees to stay for a certain period beyond the course(s) and if they leave before that they reimburse the company part of that investment.

4. Make their benefits better.

   According to a survey done by the American Institute of Certified Public Accountants (AICPA), 80% of workers would keep a job with benefits rather than take one that offered more pay and no benefits.

   While this isn’t an individualized perk such as a bonus, it can increase company-wide morale and be as valuable as cold hard cash in many ways.

   For example, orthodontic and prescription coverage may be the most important benefits for working moms and dads (have you seen what braces cost?!), while millennials will like having travel insurance as part of their health plan.

   Even if you can’t afford to contribute to the premiums and are not required by law to do so, you can make available a group insurance plan which has better rates than an individual plan and you deduct the premiums from their paycheck and send it to the insurance carrier on their behalf.

   Some organizations give everyone a personal spending account with $250 or $500 that can go towards topping up health benefits, gym shoes or transit passes. Think about what’s important to your workforce and give back in the way of comprehensive benefits.

5. Give the gift of choice.

   Ask valued members of your workforce how they would like to be recognized instead of a raise, and I bet you’ll get a whole bunch of different answers: a longer lunch break, an extra paid vacation day, a gym membership; or you’ll get feedback on the most important benefits to them.

Whatever incentives for employees you decide to implement instead of giving a raise, be transparent about it. Staff will appreciate your honesty, so don’t promise them a raise next year if you know that’s probably not going to happen or, worse yet, avoid the conversation altogether.

Employees want to feel like they are “in-the-know”, that they are appreciated and that you are sympathetic to issues they are facing.

And, when you can offer raises, do it! In the end, money can really make the difference between retaining great people and watching them leave for a bigger paycheck.

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