It’s that time again. Finalizing the annual performance review and offering performance raises where earned. However, just like last year or perhaps even more so, budgets are tight and increases will be very small or non-existent. The Wall Street Journal recently reported, “Employers plan meager 2.8% raises in 2010, after 2% bumps in 2009, according to Towers Watson.”

So what are you to do to reward employees for their stellar efforts in the face of a very difficult year? How are you to motivate them and help them engage to achieve company goals for the year?

I liked how the Guardian put it in a recent article: “If people understand the need to change, can do it without too much hassle, and can understand the positive impact of their actions, it’s more likely to happen.”

Can understand the positive impact of their actions – when you need to motivate others to achieve a task, are you just telling them what to do or are you giving them the bigger picture so they understand the value of what they are doing and why it matters?

How can you do that in this era of tight budgets? We recommend investing just 1% of total payroll – a very small investment, indeed – into strategic recognition that encourages repetition of desired and needed employee behaviors and actions within, critically, the bigger picture of your company goals and objectives. Tell people thanks for their work AND how those efforts matter to their team members, to the division and to the company as a whole.

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