How to Reward Employees When Money's Tight

Written by David Javitch of Entrepreneur.com

The end of the year is rapidly approaching. You want to demonstrate your appreciation for your employees, but don't have the discretionary funds for a large, formal party or bonuses.

As the entrepreneurial boss, you have two criteria to meet:

• You want to celebrate the holiday season.

• You want to recognize the efforts and accomplishments of your employees.

If you can't afford to throw a party, don't feel guilty. Often at these events, someone drinks too much or acts inappropriately. This can ruin the fun and create awkwardness at the office for those guilty of indiscretion.

Nevertheless, employees often assume that most companies will have some kind of an end-of-the-year celebration. In addition to celebrating the holiday, it's the perfect opportunity to recognize your employees' efforts and accomplishments. And why not? People need to have their self-esteem reinforced. They try to hold onto the jobs that will bring them the most fulfillment, whether that comes from salary, job satisfaction, status, power or other factors.

And recognizing employee actions, efforts and accomplishments is a very significant way to motivate your workers to increase their achievement levels. When their attempts pay off, they feel satisfied and productive. It's a win-win situation for the employee and the employer.

You shouldn't wait until the end of the year, however, to recognize your employees. You should be doing this on an ongoing basis and certainly during the performance appraisals held semi-annually or quarterly. At the end of the year, you can complement your earlier efforts by publicly recognizing the good work of your employees.

Basically, what you want to say is, "We value you and thank you for your performance this past year."

In addition to the formal party, bonuses are another common end-of-the-year way to recognize employee achievement. But a financial reward is just one way to say thanks. It does have some disadvantages.

Some research proves that point. Unfortunately, within a very short period of time, the employee actually forgets about the bonus. In any case, a few months down the line, the money no longer serves as a motivation. In fact, when the Wirthlin Worldwide organization asked employees how they used their bonus money, it found the following:

• 29% paid bills

• 18% couldn't remember where the money went

• 11% purchased gifts

• 11% purchased household items

• 11% put it in savings