What To Do When Leaders Want to Cut Your Recognition Budget

Maybe you’ve already gone through a budget cut. If not, it might still happen. And then again, if you’re lucky, hopefully you’ll never have to experience one. 

Recognition programs, like education and training, and other areas perceived as “soft” things, are easy targets to cut.

How can you handle these budget cutting situations when they happen? What helpful advice can help you? 

Budget Cuts From a Previous Life 

I do recall dealing with budget cuts. Not as an owner or manager of recognition programs. I was Director of Communication Disorders at a Canadian rehabilitation and long-term care facility.

That wonderful axiom of “doing more with less” was thrown around then. Supposedly, this was so easy to do. Whether dealing with patients, staff, or employees in your organization, you cannot do more with less. You can only do things differently. 

In addressing the budget cuts as a department head, I came up with some philosophical principles to present to our leadership team. They would make the final decision. Did they want our department to give 100 percent quality care to 75 percent of the patients? Or would they want us to give 75 percent quality to 100 percent of the patients? It was an easy way for them to see the dilemma we faced. 

Would they expect us to assess and treat fewer patients at the same exemplary quality they knew us for? Or would we still see everyone like we had before but with less quality care? 

Ethically, as professionals, we could never give poor quality healthcare.  

That is when our experiment began with a cut in staffing and seeing only 75 percent of the patients we normally saw. We created screening tools that we and other health care professionals could use to help triage the severity of communication problems. We developed a waiting list of patients with less severe disorders. And we provided communication aids to assist nurses and staff to work temporarily with needy patients. 

This was not the norm for healthcare professionals, but it was a reality we had to deal with due to budget cuts.  

Back to Your Reality

Now, what do you do when you are told to cut the budget for employee recognition? How can you spend your budget monies more efficiently? What programs do you look to first? 

You should first find out from the leader announcements how the cuts are being carried out. Is this reduced funding across the board to cut all expenses from all departments? Or are they reallocating finances from specific budget lines toward some more effective initiatives?

Is this projected as a short-term, onetime budget cut? If this is short-term loss for long-term gain for the organization, you could probably plan around this. Then you just have to work back up to where you once were.

Will this perhaps be a long-term and reoccurring financial concern? Perhaps your industry sector will be plagued with budget cuts for a few years. This may mean a more basic and lean approach toward recognition and reward programs. 

Asking good questions will help you position yourself to handle the harsh realities you now have to face. 

Depending on the magnitude of the budget reduction, you may have to change the recognition programs you now offer.

Two major budget expenses for employee recognition programs are formal recognition and award programs, and the more frequently used performance-based recognition and reward programs. 

Most organizations spend the most amount of time, money, effort, and resources on formal award programs. Ironically, these formal programs are at the top of the recognition pyramid and only impact 1 to 5 percent of all your employees. 

While everyone appreciates and enjoys these programs, they know we must put them on hold in times of fiscal restraint. And that is exactly what you hope for. A short-term hiatus with a return to how things were soon.

Where most organizations falter is not maintaining the everyday, low and no-cost recognition. Everyone can give this through your online recognition programs and through daily recognition practices. Unfortunately, many organizations slash and burn all of their recognition programs all at once. 

Instead, keep the non-monetary recognition programs alive. These recognition programs are typically social recognition programs that have a à la Facebook newsfeed allowing comments and likes from employees. You can use these programs to send ecards to people for reaching performance and career milestones. In a time of budget cuts, you need to keep the communication lines open. Some programs allow you to give social badges, like icons. You could give social badges when someone sees an employee living your organizational values. You still need to catch people doing things right, even during tough times. 

Principles for Handling Budget Cuts To Recognition

You hopefully have a written recognition strategy that has prioritized your recognition practices and programs. The purpose and philosophy for employee recognition will probably not change during this time of fiscal restraint. Draft some guiding principles for your leaders to use when considering budget cuts to your programs.

The following principles are the kinds of statements to draft up. That way, you are creating a pre-emptive strike that gives you control to operate by.

A sample list of principles: 

  • A commitment to recognizing and valuing people and their contributions.
  • You should focus on protecting recognition practices and programs that acknowledge people daily through nonmonetary recognition.
  • Allow some level of expenditures to run basic programs even if you stop other programs.
  • Introduce a hiring freeze.
  • Examine discretionary spending.
  • Examine ways of reducing duplication of effort.
  • Resort to using more digital based and electronically delivered recognition to save costs of using paper and other tangibles.
  • Pursue the ethics, legalities, and possibility of soliciting funding opportunities for awards and award events.
  • Challenge the status quo and any long-held traditions that might stop needed change.
  • Make strategic decisions based on current performance measures of each of your recognition programs.
  • Always be transparent, collaborative, and accountable for making important decisions that affect each of your recognition programs. 

Budget cuts are like pulling off a sticky bandage off of your arm. Whether you pull it off slowly or really quick, those budget cuts always hurt. The key is working with what you’ve got. Work to maintain the attitudes and practices of recognizing amazing work being done and celebrating those who go above and beyond.

You can still recognize those you work with, even if they may do differently.

Recognition Reflection: What principles have helped you in dealing with budget cuts to recognition programs?

Roy is no longer writing new content for this site (he has retired!), but you can subscribe to Engage2Excel’s blog as Engage2Excel will be taking Roy’s place writing about similar topics on employee recognition and retention, leadership and strategy.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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