How to Improve Employee Motivation During Recession and Downturns

Elon Musk’s sledgehammer style of restructuring—which involved firing a bulk of Twitter’s workforce purportedly to manage costs—threatens not only the reputation of his personal brand but also the future of his other flagship ventures like Tesla.

At the other end of the spectrum, CEOs of companies like Salesforce, Morgan Stanley, and Visa have publicly committed to minimizing layoffs, choosing instead to strengthen trust and stability. Their approach reflects a higher commitment to building a society that serves all—not just shareholders.

In 2025, with a potential recession looming large and organizations placing every perk under a microscope, we need more of this people-first leadership. Because now more than ever, companies must focus on how to improve employee motivation during recession—not reduce it through reactive cost-cutting. How leaders respond in tough times doesn’t just shape productivity—it defines culture, loyalty, and long-term business resilience.

Laying off isn’t paying off

Caring for the troops who go to war for you every single day isn’t just the right thing to do from a human perspective. From a business standpoint too, they are the smart thing to do. Leaders who had cut back on workplace incentives during the Great Recession (a good 72% of companies did, actually) will be thinking twice before repeating something like that in today’s age.

After all, if history has taught us anything, losing critical talent will hurt productivity and profits in the long run. During periods of market volatility, rising inflation, and uncertainty - when the need to clench one’s teeth and simply survive is stronger – losing reliable personnel who have been holding the fort can be particularly crippling. Additionally, the additional cost will be incurred when re-hiring begins, and training picks up again.

However, where the organization takes the greatest punch is its reputation within markets and communities that matter to it. Cutting back on incentives and perks when the chips are down – a reptilian reflex – instantly sends a red flag to workers that this is not an organization they can rely on.

When the good times return, the best guys will be the first to fly the nest. It is also often a clear signal to partners and associates that the company not worth investing emotionally in. In an era of peer reviews and dark social where news travels fast, this wrecks the brand irreparably.

Caring is good (for) business

On the other hand, having an inclusive and expansive approach can work wonders. During the 2007-9 recession, when the S&P 500 suffered a 35.5% decline in stock performance, companies with the most inclusive cultures grew by 14.4%.

In general, inclusive companies are 2X more likely to meet or exceed financial goals, 3X better poised to score high on performance, 6X more innovative, and 8X more likely to achieve superior business outcomes.

Each trait multiplies in power when times are not rosy, like a recession. And yet, retaining a workforce with a healthy mix of backgrounds is usually the last thing on a CEO’s mind when hard times fall.

What doesn’t destroy us only makes us stronger

Panicking during a recession blinds us to the simple fact that employees and employers are both in the same boat and fighting for survival. Research suggests worker efficiency increases during a downturn. Why not turn the common situation into a strength… as a united team?

3 Ways to rethink the 3 r’s of motivation : rewards, recognition, reinforcement

Just as companies thrive on incentives, individuals do, too. It's time to talk about how employers can use rewards and incentives to help employees do their jobs better and feel more appreciated. That's the whole reason for doing what we do.

1. Reset the game

Recessions are life-altering occasions. There’s little doubt nearly everything and everyone in its path will be impacted somehow. Why not leverage the malleability of the moment to reimagine the building blocks and first-order principles your organization is designed around? It'll be easier now than ever to seed new mindsets and culture tentpoles, weed out stubborn bottlenecks, set new visions and expectations, and usher in a hopeful new chapter in the team’s journey.

First step? Create psychological secure zones to make people feel uniquely valued and supported. Step two? Prioritize and promote traits, habits, and skills that take an outfit from good to great. Seize the moment to champion behavior pillars that drive profit, engage customers and build positivity.

Rewarding these consistently will fuel grassroots level transformation across levels and hierarchies, turning the business not just recession-ready but equipped for the horizons that lie beyond.

Channelize these virtues into a points-based rewards formula:

• Trust and transparency
• Balance and equanimity
• Listening and empathy
• Adaptive thinking
• Taking tough decisions
• Ability to bounce back
• Innovative problem solving
• Learning appetite
• Informed risk-taking
• Lean efficiency (doing more with less)
• Seizing initiative
• Motivating teams
• Time management
• Communication
• Collaboration

2. Amplify the Alternatives

There are several ways of cutting costs without shrinking the incentive purse: Hybrid work models that delete both operational and travel costs, using technology more effectively, coaching employees to manage their own finances better, and long-term incentive plans like ESOPs, to name a few.

Thinking out of the box is where leaders must double down on when the chips are down instead of jeopardizing proven incentive programs which, in the current day and age, are much more than just a ‘nice-to-have’. Strategically laid out stimuli and stimulations not only bring home the bacon (sometimes with an extra layer of cheese) by helping sell more. They also build a strong (and, ironically, recession-proof!) people culture, boost customer loyalty and lift brand goodwill amongst markets the company serves.

Rolling back on carrots as one hunkers down to let the dark clouds pass may be the go-to schtick when there’s a recession ahead, but it overlooks a simple truth: Only when businesses are led with empathy do they have the strongest chance of survival.

A slowdown offers businesses to discover that elusive – but priceless - balance between the two and convert it into a lifelong advantage. Companies that juggle paralysis and aggression deftly emerge from the crisis stronger. It’s a hack worth mastering. Rethinking incentives with an open mind allows a business to turn troubled times into opportunities.

3. Think beyond Moolah

Despite firms spending billions every year on incentives, there is a huge crisis of motivation in most large corporations. The reason is that we tend to equate recognition solely with financial rewards. In the process, we underestimate the pull of non-monetary spurs, which can be just as (if not more) fulfilling, value-for-money and sustainable. Frederick Herzberg’s two-factor theory reminds us that human motivation isn’t something one can manipulate by throwing money at the problem.

Employees are ‘moved’ by a host of other factors beyond cash - such as the responsibility and faith reposed in them, working conditions, personal growth, relationships, and the ability to make a difference. A fine example of the latter is the Virgin Group’s offering employees the opportunity to engage in skills-based volunteering to help people in underprivileged communities and developing countries become successful entrepreneurs.

Motivation is a layered outcome of complex internal triggers and external impulses. According to Wharton management professor Adam Grant, intrinsic rewards – such as the opportunity to do enjoyable work that leads to personal development and brings a sense of accomplishment - are the most valued form of incentive across generations like Baby Boomers, Millennials, Gen-Y, and Gen-Z.

And, contrary to popular perception, extrinsic rewards - which map to more materialistic motivators like money, prestige, and indulgence – only come in second. Low tides, like recessions, are when workers must be given extra space, resources, and consideration, all of which complement and align with intrinsic motivations.

According to John Challenger (CEO of Challenger, Gray & Christmas, a Chicago-based global outplacement firm), “If the company has a set of perks adapted to what that person needs, then it’s hard for the employee to leave.” What better insurance than the loyalty of battle-scarred veterans does a company need when a recession threatens its existence?

This presents the perfect premise for CXOs, entrepreneurs, and people leaders to stash the cash for a rainy day and get creative with non-monetary incentives.

Here’s what that can look like:

• Learning and mentorship opportunities
• Career progression tools
• Administrative support like virtual assistants that cut down collateral time wastage
• ‘Alone time’ for a side hustle
• Mental and physical wellness support
• Membership in like-minded communities and clubs
• Outlets for hobbies and talents
• More meaningful titles
• Offering sabbaticals
• Child-care assistance
• Tips for personal finance management
• Flexible hours with remote options
• Volunteering opportunities
• Employee-giving programs that add meaning and belonging to work
• Experiential gifts
• Swag merchandise
• Handwritten notes
• Lunches with the leadership
• Public recognition

Gamify eligibility. Express gratitude. Loosen the leash. Do stuff together. Invest in betterment. Celebrate the little things. One’s imagination limits the list here.

Start by asking these 5 questions

Employees are the greatest wealth-generating assets of the company, and the right reward tells this important demographic that the leadership ‘gets’ them. The trouble is, employees, come in a variety of different avatars. So, indeed, do perks and incentives. Where should you begin if you were to stitch together an effective incentive roadmap?

Wharton management professor Nancy Rothbard offers a handy guide: “One way to think about making perks worthwhile is to look at your company's culture: What are the values, norms and behaviors that reflect its core identity? Then choose perks strategically around that.”

There are, of course, several other considerations as well. Designing a bespoke reward and incentive paradigm, therefore, must begin by asking the right questions. Some of them are:

Why Empuls makes more sense now than ever before

In uncertain times, it’s tempting for businesses to pull back on engagement programs and perks in the name of cost-cutting. But this is precisely when employees look to their organizations for reassurance, consistency, and care. Empuls, an AI-powered employee engagement platform, is built to help leaders navigate this delicate balancing act—keeping morale high without breaking the bank.

Empuls enables HR and leadership teams to rethink rewards, recognition, and reinforcement with precision. It’s not just about handing out gift cards—it’s about creating moments that matter.

Here’s why Empuls stands apart when times get tough:

• Automation without apathy: From service awards to peer recognition, Empuls automates celebrations without losing the human touch. Think personalized wishes, AI-generated shoutouts, and milestone moments that feel anything but generic.
• Reward smarter, not harder: With zero markups and bill-on-redemption pricing, Empuls ensures you don’t pay until your people feel rewarded. Add in a global, tax-compliant rewards catalog with 1M+ options, and you’re offering value without overspending.
• More than just money: Empuls helps companies go beyond monetary perks, tapping into intrinsic motivators through value badges, social recognition, and community groups. Because not every pat on the back has to come with a bonus.
• Perks that actually perk you up: With access to early wage advances, tax-saving benefits, wellness perks, and lifestyle allowances, Empuls empowers employees to stretch their earnings, reduce stress, and feel supported—financially and emotionally.
• Pulse on the people: The platform's AI-backed engagement surveys and people analytics help you listen actively and act swiftly. You don’t need to guess what your workforce wants—you’ll have the data to prove it.

In an era when employee loyalty is fragile and reputation spreads fast, Empuls isn’t a luxury—it’s a strategic lever. It’s how forward-thinking companies show they care, even when budgets tighten. It’s how you retain top talent while others lose theirs. And most importantly, it’s how you build a culture that doesn’t just survive tough times—but comes out stronger on the other side.

So when others are pulling back, let Empuls help you step forward. Quietly, but powerfully.

Key takeaways

Guesswork can be costly, so conduct a sentiment survey or dipstick to ask your folks about what they want, and then design a workplace around those needs. AIG UK Benefits has shown that even though 86% of employers claim to consult with workers on the issue of sops and stimuli, only 23% of employees confide that their opinions were solicited. When recessionary times force businesses to re-think and re-format incentive approaches, the best strategy is to co-create it by involving employees in the decision-making process. Make them feel they helped shape the decision.