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Beyond Paychecks: Creative Ways to Reward and Retain Employees


Record-low unemployment levels, rising turnover rates and a growing flock of employees who can virtually name their price: Employers are left scrambling for unique ways to attract and retain the global talent they need to move their organizations forward. Over the past decade, such perks as signing bonuses, flex-time schedules and stock options have been commonplace. That means employers must begin flexing their creative muscles. The result is a number of fascinating and effective approaches to compensation. In addition to merely keeping employees, these unorthodox methods serve to energize the workplace and instill a sense of pride in employees. Not only do they see the success of their company in the form of extra goodies, but they also recognize that their employer truly cares for them and wants to provide them with services and special perks that will make their lives easier and make them feel valued.

In this Quick-Read you will find:

  • Examples of creative forms of compensation currently in use by other successful companies.
  • Questions you need to ask yourself and your employees in order to develop an effective plan.


Creative compensation need not be an expensive proposition. While it’s true that some of the more high-profile examples have cost thousands of dollars per employee, some extras can be given at no cost whatsoever. Before developing any new program, however, you need to take a close look at your employee population. Are they young, active people who might appreciate Friday afternoons off or gift certificates for a popular sporting-goods retailer? Are most from dual-career families where juggling the responsibilities of home and work sometimes puts them in a bind? Or are they extremely career-oriented employees who would relish something that points to their own individual success? If you are in a quandary as to what motivates them, just ask them. Regardless of what kinds of people make up your employee pool, here are some unique and innovative ideas for adding a little creativity to your compensation plan:

  1. For those employees whose eyes are constantly fixed on the corporate ladder, something as simple as a change in title can be a very effective, not to mention free, form of compensation. Instead of marketing manager, dub someone vice president of marketing, for example. Naturally, you can tack a raise onto that new moniker if you like, but in many cases, simply the new designation of respect is enough.
  2. Many of today’s young employees value flexibility more than anything else. Thanks to technology, they will soon be able to do their work from virtually anywhere on the planet. So if an employee comes to you, asking for an extended time off for a honeymoon or family emergency, why not suggest they continue to work for you part-time via laptop and the Internet for some of that time? They may appreciate the opportunity to continue bringing home the bacon while soaking in some rays or helping out with a difficult situation.
  3. In today’s ultra-fast-paced society, many dual-career couples find they just don’t have enough time to get everything done. As their employer, you can help them out and gain much loyalty by simply hooking them up with the right people and services they need to take care of their everyday chores. Consider having a local drycleaner pick up and drop off laundry at your place of business or contracting with a housekeeping service to clean employees’ homes at a group rate. In recognition of special achievements, you could even foot the bill for a month’s worth of housecleaning or a handyman’s services for the day. The cost is relatively minimal, but the payback goes a long way.
  4. If your employees are drawn to outward signs of prestige and your budget can handle it, you could join the growing legions of companies that are leasing cars and motorcycles for their employees. In some instances, something as simple as a one-year anniversary may merit such a reward, while in other cases, employees are only given such a lavish item for achieving a special milestone or landing an enormous account. Whatever they do to earn it, you can bet your employee will be thinking of you every time he or she turns the key.


When Jane Callanan first arrived as vice president of human resources at Cambridge, Mass.-based Razorfish (formerly I-Cube), the IT consulting firm was just 130 employees strong. As with many technology-oriented companies, however, growth came fast, and soon Razorfish was pushing 500 employees.

Callanan spent her first month with the company talking face to face with employees, asking them what they really thought of their employer, particularly in the area of compensation and benefits. An employee satisfaction survey revealed the lowest scores were in those two areas, leading Callanan to get right to work putting effective plans in place that would both attract and retain the kind of top-notch talent Razorfish needed. Several innovative programs were developed as a result of Callanan’s discussions with employees. For example, each manager is given permission to present an employee with the Time To Shine Award on the spot in recognition of a job well done. The prize is geared towards each recipient’s individual needs, interests and lifestyle. Some may receive a handyman’s or housekeeper’s service for a day, while others are given dinner and theater ticket packages or a day at the spa.

In addition, Razorfish established an innovative referral program, which awards a one-year lease on a Harley Davidson motorcycle or Volkswagen Beetle to employees whose referral results in a successful hiring action. The results, says Callanan, are phenomenal: 30% to 35 % of new hires come in through the referral program, and Razorfish boasts one of the lowest turnover rates in its industry.

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  1. Take a good long look at the demographics of your employee population. Observe what kinds of activities they are talking about on a Friday afternoon. Ask them what kinds of things they like to do and what rewards have meant the most to them during their career.
  2. Examine your own budget. Can you afford a lavish and creative compensation program that awards cars to employees in recognition of an anniversary or significant achievement? Would it be more feasible to give occasional spa days, housecleanings and repair service? Even if you need to stick to free forms of compensation, don’t be frustrated. Sometimes, the old adage “it’s the thought that counts” really does ring true.
  3. Evaluate your program’s success six months or a year after implementing it. Has turnover dropped? Do employees seem happier? Are they recommending friends and former colleagues for open positions at your company? These are all signs that your creativity has paid off. However, that doesn’t mean you can rest on your laurels. Periodically, take those first steps again. Talk to your employees, look at their demographics and ask yourself what you can do to show you value them as a member of the team.



“107 Tips for Keeping Valuable Employees” by Joan Stewart. This $5 pamphlet may be purchased at this site.

Compensation Handbook: A State-of-the-Art Guide to Compensation Strategy and Design by Lance A. Berger and Dorothy Berger (McGraw-Hill, 1999).

The Hay Report: Compensation and Benefits Strategies for 2000 and Beyond (Center for Management Research, 1999).

Streetwise Motivating & Rewarding Employees: New and Better Ways to Inspire Your People by Alexander Hiam (Adams Media Corp., 1999).

U.S. Master Employee Benefits Guide by Linda Panszcyk (CCH Incorporated, annual).


Compensation and Benefits Review publishes frequent articles on compensation.

Internet Sites

Job Star Salary Surveys

Benefits Link

Motivating Employees, Inc.com.

Article Contributors

Writer: Julie Cook