Way to employee's heart isn't always cash

Big old Microsoft faced some harsh criticism this week after it tried to reclaim excess severance pay that was mistakenly awarded to 25 workers. It eventually reversed its decision.

The company's HR department probably didn't imagine this accounting error would snowball into such a big public relations gaffe, but then again, businesses globally are operating in a highly-sensitive economic climate.

These days, layoffs seem the norm, headcounts have been frozen, bonus payouts are scarce, and discussions about staff promotions and pay increments aren't entertained. Most companies need to think of ways to reduce their spend and retain enough in their cash pool to sustain the company.

Unfortunately, because HR usually makes up the highest overhead in an organization, employees are one of the first things businesses look at when they need to cut their operating cost.

It's unfortunate because people are a company's biggest asset, and good solid talent is still hard to come by.

As a manager of my own team, staff retention and development is one of the things I think about all the time. I try to ensure that every valuable member in my team is given reasons, be it in terms of career or skills development, to stay loyal to the company.

Obviously, one of the best and most direct ways to ensure loyalty is very simply, hard cold cash. So, economic conditions like the one the industry is currently trudging through, makes this aspect of my job that much tougher.

But, there are ways businesses can help boost staff morale--and hence, loyalty--if economic circumstances don't allow them to do so through remuneration.

I started my career as a rookie reporter in 1998, right smack in the heart of the Asian Financial Crisis. The company I was with at that time faced similar market conditions as the industry is facing now--there were staff layoffs, frozen headcount and pay cuts abound.

So, I wasn't expecting very much when it came time for the annual salary review, especially since my company had announced there would be no pay increments that year. But, I was called into the office for a 1-1 meeting with my managing director, where he told me my pay will be adjusted slightly in recognition of my performance that year.

The increment was indeed nominal--just enough for me to buy a couple of friends one round of drinks. But, the fact was that he took the time to tell a young employee that she's done a great job, and that the company recognizes her as a valuable asset. I felt truly appreciated and was elated all the midnight hours I burnt slogging over my articles were worth it.

For me, that one simple act was enough to seal my loyalty to the company for another two years.

Employees are mostly an understanding lot. If their company is going through a rough patch when the economic tide changes for the worse, few workers would insist on getting salary increments or bonus payouts.

Whether this tolerance is induced by a fear of losing their rice bowl or recognition that it's now an employers' market, isn't the point here. What's important is that businesses should not exploit the situation or they risk losing their best talent once the economy recovers.

Employees are after all emotional homo sapiens, and can get especially edgy when they feel they're not getting just recognition for their work. When companies cannot afford to dish out monetary rewards to deserving employees, they need to look more closely and think more carefully about how they handle staff welfare and morale.

I doubt if the affected Microsoft workers were more upset about the money than they were over how the company handled the issue. It failed to explain why there was an accounting error and even added a line threatening monetary punishment if the money wasn't returned. Dishing out statements like that, particularly to workers they've just laid off, is surely uncalled for.