During Financial Woes, Should Companies Nix Extravagant Awards?

Dawn Burke Dawn Burke, Recognition

“It doesn’t take courage to give money for hitting a number.”

–Simon Sinek, WorkHuman 2018


I’m a believer in recognizing extraordinary workers with something palpable.  I especially like the idea of creating “experiences” as recognition rewards over cash bonuses.  Experiences build trust, enforce connections, and create memories. An experience could include anything from an incredible dinner to attending an event like a concert, or even a 5-star vacation.  Achievers who have given their all, produced clearly defined results, embraced accountability for their actions, and have remained optimistic in a stressful environment should be publicly rewarded with something the company put some skin in.  

But if a company is struggling financially, is it right to reward at all costs?  Does it model good stewardship of money? Are companies sending the right message that a select few are more important than the whole? And if the costly rewards are cut for a year or two, is it fair to the “achievers”?

In my opinion, it is right to cut costly rewards and it is fair for the achievers who may not benefit from a trip to St. Lucia.  

“Struggling financially” is a broad term, but here are my Mendoza lines:  

  • If any layoffs happened over the year, the awards ceremony at the Ritz-Carlton needs to be cut.  
  • If any “emergency meetings” happened within the year where leaders were forced to cut 25% or more of their operating budget (or the board “will not be happy”), the trip to St. Lucia for ‘’winners” needs to be cut.  
  • If the critically approved headcount gets cut mid-year and impacts the ability to get work done, the wine-tasting adventure needs to be cut.

And here why it is fair to the top-performers.  First of all, let’s be clear. Although it is fair to cut expensive rewards, it totally sucks. Totally. Fairness and suckage are two separate things.  

  • It is fair because there are no guarantees in business.  
  • It is fair because any reasonable person knows the expense it takes to reward a few is not worth punishing even ONE employee through an underserved layoff—a layoff that affects one’s livelihood, career, family, mental health, and confidence.
  • It is fair because building trust with the company should be priority one. The decision to reward extravagantly when financials are impacting the ability to do business breaks trust within the entire employee population.  It questions leaders’ abilities to make right decisions and models the wrong priorities. And you cannot expect employees to make integral decisions if this is what leaders model.

Now, if you are a company that truly does value extravagant rewards over employees, then certainly spend the money. I mean that sincerely. There are some organizations who are very open about where their priorities lie, even if it is rewarding achievers at the expense of laying off others. Many businesses thrive in this environment; especially ones where top execs “chaperone” the expensive event. 

If a company is in an unfortunate position and must limit financial rewards for truly deserving employees, there are still many options to make these employees “whole” and still feel they’ve gotten the recognition they deserve.  You can still create experiences that may be more affordable until times get better. You can re-plan the expensive party when the financials make sense.

It doesn’t take courage to give money for hitting numbers.  But it does take courage to do what’s right, even if that means postponing expensive rewards.