Without fail, I have always managed to meet a line manager who felt he or she could not compete with other organizations because the organization we worked for paid too little. And over the last 2 years, not being able to increase salary, not having bonuses, and in some cases, decreasing salaries meant managers felt even more pressure to try and keep staff engaged (it's not that they were leaving necessarily, but just because their body showed up did not mean their head or spirit was into it).
That said, it doesn't matter if we are in a down economy or an inflated economy - salary is not the only thing that keeps an employee motivated or retained for that matter.
Positive reinforcement, a term often associated with the process of behavior modification, is quite honestly the easiest, cheapest and fastest way to ensure you keep your staff fully engaged. It can be as simple as a verbal "Thank You - I like how you did X", to pointing out the individual in a team meeting, to an email that clearly outlines the behaviour you liked and how it made an impact, to a hand written note indicating same. The trick - provide the reinforcement almost immediately after you see the behaviour you like occurs. The chance of the behavior repeating itself is enhanced, the employee learns what you appreciate and in return, the employee stays engaged and continues to find new avenues of reinforcement. It's all about being creative, being in the moment and following through with some positive actions of your own! Salary can't compare to a positive environment!
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