Adapted from Microsoft Small Business Kit by Joanna L. Krotz, John Pierce, and Ben Ryan

How you manage your staff and handle their conflicts and goals directly influences the company climate. That weather report — fair or foul — is broadcast endlessly to customers, vendors, suppliers, and everyone else in your industry. When companies recognize employees by offering tangible rewards, the business becomes more productive and better at retaining talent. In addition, setting policies that make employees want to stick around is cost effective. Besides boosting profits, a stable staff cuts the costs of recruiting and training and avoids downtime and irate customers.

The route to making employees feel that they matter takes some attention, which, of course, will pay off for you. Here are some proven strategies:

• Recognize the individual   Let each staff member know that he or she does make a difference.
• Be responsive   If you solicit ideas from employees on, say, teamwork or how to develop new business, follow through. Don't ask for feedback or suggestions and then simply ignore them.
• Tap your top performers as teachers   Have employees share their expertise by training or mentoring other staff members. You'll not only save your training budget, but you'll also make the skilled employees feel more important.
• Interact with employees   Each workday, stop and chat with employees instead of rushing through the door and immediately heading for your desk or office. No one likes to be taken for granted or feel interchangeable.
• Help employees to achieve their dreams and goals   Your company is also their company. If you want them invested in your success, you need to invest in theirs as well. Periodically, meet with each employee to set yearly goals and accomplishments, and keep a written record so that you can benchmark progress.
• Create an atmosphere of trust   Employees don't like secrets or surprises. Don't spring things on the staff or make changes without communicating why you're doing it.
• Don't turn into Supermanager   Ask for help. Brainstorm with employees and ask for their input to solve problems or develop strategy. It might take a bit more time, but you'll end up with a happier, more productive staff — as well as some great ideas.

Say thanks with rewards that don't break the bank

New businesses, of course, can't afford to hand out hefty bonuses or expensive perks to top performers. But you don't have to spend a lot to say, "Thank you." A spot bonus for performance lets your employees know, right away, that you noticed their good work.

You can also express appreciation with noncash rewards. Typically, talented employees who go extra miles are not thinking about paychecks. Many studies have shown that rewards of recognition and time off are as effective for workers as money — or more so.

Here are a few low-cost ideas you can use to let employees know that you appreciate their work:

• Hold an award ceremony in the office or at a more formal evening venue to hand out plaques, certificates, or funny T-shirts.
• Host award dinners at local restaurants, either for the entire team or as gifts for an employee and a partner.
• Give the employee a weekend getaway.
• Give a lottery ticket each week to an employee who performs well.
• Buy the employee two tickets to a sporting event, concert, movie, or play.
• Offer time off, or flexible hours for a specified period of time.
• Take out an ad in the local newspaper or an industry trade journal thanking the employee or the team.
• Donate money or time to a charity or organization designated by the employee.
• Send out a card or special announcement to the company's clients recognizing the employee's efforts.
• Give the employee a training course of his or her choice.
• Put the employee in charge of the company or a department for a day.
• Assign more high-quality and demanding work. Offering more challenging assignments tells employees that you appreciate what they are doing and you trust them to handle more responsibility. It also provides training and experience.
• When staffers bring in potential new employees, award $500 or dinner on the company if the applicants are hired.
• Find a company with excess inventory or some service downtime that your employees would enjoy, and arrange a swap. You can trade your product for theirs. Make sure to check with your accountant before sealing any deal, since there are usually tax consequences for such bartering.

Reap the rewards of recognition

As you can see, rewards can come in all forms, and they don't have to be high cost or monetary. For example, carmaker Saturn — a company that is synonymous with team spirit — rewards its employees with Hostess Twinkies. At one point, Saturn broke all records for bulk orders of Twinkies. You should also never underestimate the power of individual and team recognition as well as direct praise. These are just a few steps that you can take to make your employees feel more valued, more satisfied, and more invested in the future of your company.

About the authors   Adapted from Microsoft Small Business Kit by Joanna L. Krotz, John Pierce, and Ben Ryan. Visit Microsoft Learning to learn more about this book and its authors.