How do you make employees feel valued when you’re unable to offer pay rises?

Lesley Cooper is a management consultant with over 25 years’ experience in the design and delivery of all elements of employee wellbeing management programmes. In 1997 Lesley founded WorkingWell, an award-winning specialist consultancy that helps companies to manage workplace pressure in a way that facilitates growth and development. WorkingWell was shortlisted for “Best Wellbeing Service Provider” at the Great British Workplace Wellbeing Awards 2021. We caught up with her to get her take on a problem many employers are facing right now.

“Whether due to financial pressure, professional development or other factors, there will come a point when employees ask for a salary increase. Widespread pay rises are often expected to be an answer to the cost-of-living crisis having an increasing impact on households and businesses. But with many companies unable to do so, how can they make their teams feel valued without pay raises?

Age diverse workforces value different things. Opportunities to share knowledge and develop others are often more valuable to older age groups than money. Time and work flexibility is more valuable to mid-lifers than it is to the older age groups, whose carer responsibilities are often less acute. To younger staff, just starting their careers or a way in and now struggling to get a mortgage, money talks, but so does career progression and skills development.

What is universal to all age groups however is the need to feel appreciated, and that their contribution is valued. Appreciation is the most fundamental human need and as a result links directly to the performance enhancing states of a sense of belonging, reciprocal trust, and psychological safety. Feeling safe around bosses and colleagues is fundamental to productivity, creativity, engagement, and the release of discretionary effort. Genuine and specific appreciation of the worker, not just the work, can ‘buy’ an employer more innovation and contribution than cash.

WorkingWell’s own survey data (n=33,000) shows that nearly 40% (37%) of employees say they don’t feel recognised, but when asked what better recognition would look like to them, the answer is consistently personal appreciation, not financial reward (although people always say that would be good too if it were available, but they accept that it often is not). Other data items (see below) back this up, specifically 30% lack of trust and lack of encouragement support.

Upskilling opportunities and workplace perks are valuable as tangible forms of recognition for employee value – the former for career development, focus on lifelong learning, development of trust and recognition and the latter for the contribution to employee wellbeing. But they are not specific enough to humans to be as much value as empathy and curiosity.

What’s required is a complete shift in communication and HR/employee relationships, and in a sense, this shift has already started to happen. The psychological contract between employer and employee has changed, with straight financial reward for services rendered being a relic of a bygone time. Employees expect more, and it is a buyer’s market. Personal and corporate missions are frequently intertwined at an emotional as well as a practical level, but they also sometimes conflict. Empathy and curiosity on the part of the employer about the employee as a human at work e.g., awareness of the existence of personal hopes, fears and challenges that will accompany them to work every day, can carry a generous exchange rate when hard cash is tight.

Appreciation and recognition don’t pay the bills, but when it is specific and genuine it can do a lot to help employees navigate the complexities of work/life integration. If they feel their employer ‘gets them’ and values sincerely their place on the team, they are more likely to feel secure inside a mutually beneficial partnership, rather than trapped within an unfulfilling and underpaid one.

Ultimately, the key to making employees feel valued is to recognise their efforts. As employers discover new ways to reward their teams, they will see that fostering a culture of recognition and appreciation builds a foundation for a thriving and motivated team that can drive organisational success even in times of financial constraint.”