At the same time, businesses that cut staffs, salaries and hours are starting to see demand return. As it does, the reduced staff is overworked as they struggle to deliver goods and services with the same level of service and timeliness that the clients expect. Clients are beginning to notice that the company is not as responsive as it used to be.

Business owners are caught in the middle, unsure that the demand is “real.” They hate to hire back more workers, but their teams are stretched and tired. They feel unappreciated and restless. And yet, the business needs more production.

I am seeing this more and more. Just as sales are starting to pick up, a key person jumps ship – the competition just gave them a 20 percent raise and a promotion. Now, the company is forced to serve their customers with a skeleton staff, without their best person, all while having to recruit a replacement. It couldn’t get any worse!

If you find yourself in this situation, there are a few things you can do.

1. Appreciate the team you have. If you are still on reduced hours or haven’t restored your pay cuts, do it now. Other companies have not only restored what they took away, but they are hiring new team members and they are looking hungrily at your people. But just giving back what you took away isn’t going to gain you much loyalty. You need to do more. Are there key employees who have really stepped it up when you were short handed? Are they ready for a promotion and a raise?
2. Be on the lookout for good talent. There is still some good talent available, but it’s going fast. Do you need to backfill some experienced talent? The time is now.
3. Put some fun back into your workplace. Have a party, find a way to say thank you to appreciate those who stuck it out with you. What about movie tickets, an extra day off or a day at the ballpark with the families?
4. Fill those holes. If you are experiencing defections, this is a time when getting help from a recruiter can really pay dividends. There are still lots of candidates and you don’t have time to sort through 200 resumes to find the 20 good ones. Get some help.

Those are some tangible things, but it’s also important to address the intangibles. When the economy went bad, some of us tended to “hunker down” in our offices or we were on the road trying to sell something. Our people felt disconnected at a time when they really needed to know what was going on. If this happened to you, it’s time to reverse the trend. You still need to be in front of the customer but your people need you too. They need to know you are looking forward, that you have a plan to get the company back to a place of strength – and that you can talk about that with them. Get back to having company meetings, reviewing the numbers with them and generally including them in the process of rebuilding and moving forward.

It may be that the recovery is as difficult as the fall, balancing the increasing demand with increasing costs. But putting in some time to make sure your people are happy and content will ensure that you are going into this time with the strongest possible team behind you.

More and more companies are adopting variable pay programs to try to do just that. 90% of US companies have some variable pay in 2009, and more of those programs are reaching down into lower and lower levels of the corporation. Bonus programs provide a way to recognize those exceptional individuals on your team without permanently adding to the overhead of your business. But setting up and administering a bonus program can be tricky.

Here are a few DO’s and DON’Ts that I have observed through the work with my clients.

DON’T make it discretionary. It’s way too easy to reward people for things you “like” versus things that really drive the business. When it’s discretionary team members tend to treat it more like a lottery ticket then a reward. DO make it “formula” driven. Define a formula at the beginning of the year and keep people updated to where they stand throughout the year. Make sure people feel like they have the ability to “move the needle” on the numbers they are tied to.

DON’T spring things on people at year end. In order to drive consistent behavior DO make a plan at the beginning of the year and stick to it. This is a lot easier if you create a budget at the start of the year and use budget numbers to drive the bonus.

DON’T make a different plan for everyone. It’s so hard to make a plan that’s fair and drives consistent behavior when you figure one out you want to use it as broadly as possible. DO vary the goals for different people and departments so that what you are measuring is meaningful to them.

DON’T promise fixed dollar amounts. When you set a bonus of say $5000 if our numbers are above budget, it means you have to renegotiate it year after year, or risk it falling out of relevance. DO set it as a percentage of salary, this way it always stays a relevant component of the employee’s compensation as their salary changes.

Bonus plans give you a terrific opportunity to recognize & reward your exceptional team members without adding overhead to your business. Who are you thinking about right now who needs a bonus plan?