The economy was certainly a talking point back in the summer however it feels more of a shadow now when compared to the past last two weeks. Across the Atlantic US corporations such as Lehman Brothers filing for bankruptcy and the major insurer AIG being taken over by their government may be ‘old’ news. But how many anticipated the much debated US government decision to initiate a major ‘bail out’ which then failed last night. In the meantime, a swift takeover of HBOS and a part nationalisation of Bradford & Bingley plc on this side of the pond move the western economy closer into unchartered territory.

While there may be fewer surprises about how we got there, what impact does the current economic situation have on reward? Since this may sound like an obvious question to some, perhaps we should ask how can reward help to navigate the current situation? As always there are winners and losers with online businesses and exporters to other currencies benefitting greatly. However for organisations with less disposable cash as well as employers looking for a decent return on investment then consider the following:

• Know your current position – Are you clear on what reward packages you offer people across the whole organisation? Are employees aware of what you offer them? If so, are they relevant to their requirements? And do they represent good value when taking company cost into account? The first step is to analyse what you’ve got and the cost of providing pay & benefit components including administration, statutory charges etc.

• Define any gaps against your budget and goals – When there is pressure to cut costs, taking a longer terms view will reduce the risk of costly mistakes. The analysis should highlight any duplication of benefits such as insurance relating to life; health cover, income protection etc. which can overlap with sick pay schemes. Consider if an income protection policy that covers 75% of salary to aged 65 is really appropriate going forward. Consider how this lines up with your contractual commitments. Think carefully before considering making changes, but don’t ignore them.

• Consider salary sacrifice schemes (for UK based organisations) – While the popularity of salary sacrifice or salary exchange schemes has been growing in the UK, now is certainly a time to consider introducing them or increasing their scope. The national insurance savings they can offer to employers and employees’ cannot be ignored. With a wide range of benefits eligible for sacrifice such as pensions; childcare vouchers; mobile phones etc. there is plenty of scope. And the downsides? There is the inevitable administration required to establish and run such schemes however this is typically outweighed by cost savings. As with all salary sacrifice or salary exchange schemes, they are not suitable for employees receiving the national minimum wage.

• Recognition still counts – When the pressure is on, the importance of recognition can get overlooked by line managers. This is turn can lead to poor customer service and reduced motivation levels. Ensure that you have a recognition scheme that contributes towards people choosing to use their discretionary effort to ‘go the extra mile’.

• The sum is greater than its parts – When there is less cash, it pays to focus on the total package when communicating with employees. And speaking of this, there is much merit in practices such as Total Reward which integrate reward elements such as the working environment, career opportunities and recognition as well as the financial rewards. While total reward is not a ‘quick win’ it is worth considering the scope for career development or flexible working which could prove more valuable than say a 2% pay rise.

• Don’t cast aside goals which are integral to your values – Phrases such as ‘people are our greatest assets’ which can wear thin for employees when they experience practices that don’t match up to the rhetoric. This certainly true when executing difficult decisions such as redundancies. This also holds true for organisations striving to be an employer of choice.

How are you managing the current economic situation?