Don’t Break the Bank — Or the Team

Before hiring anyone, ask yourself a basic but powerful question: How much does it make sense to pay for this role? Not what the candidate wants. Not what your dream version of the job deserves. What actually works in your budget for this particular role?

If you’re stretching beyond what you can afford, it may feel generous in the moment, but it usually backfires. Resentment creeps in. Expectations rise. And what started as generosity begins to feel like a burden.

If your budget doesn’t match market reality, you still have options. The goal isn’t to pay the minimum — it’s to create a structure that’s sustainable and satisfying for both sides.

One approach is to hire part-time instead of full-time. Not every position needs 40 hours a week, and in some cases, hiring someone for fewer hours can actually increase productivity and focus.

It also opens the door to candidates who might not be available full-time, like parents of young children or professionals seeking better work-life balance, allowing you to access strong talent without overextending your budget.

Another strategy is to reallocate the higher-level responsibilities of a role to your current team and then hire someone new to take on the remaining lower-level tasks. This lets you stretch your resources while offering your more experienced employees an opportunity to step into leadership or strategic thinking roles.

You can also consider hiring a junior employee and investing in their training. While this may require more time up front, it can pay off significantly in the long run. If nurtured properly, a junior hire often brings fresh perspective and strong loyalty. And because they’re learning the ropes within your organization, they’re more likely to adapt to your systems and culture than someone who arrives with fixed habits from elsewhere.

Each option takes creativity, but allows you to stay financially grounded without compromising quality, morale, or long-term potential.

The Purposeful Raise

Some companies offer predictable, built-in raises — often tied to seniority or cost-of-living adjustments. There’s logic to that, especially during inflation or economic strain. But there’s also a risk: When raises are guaranteed, they stop feeling like recognition.

There’s a stronger alternative. Offer raises that are occasional and rooted in performance. A raise that shows up after visible growth or hard-won success is not just money — it’s validation. And when it arrives unexpectedly, it lands with far more power than any standard annual bump.

Of course, there are years when raises simply aren’t possible. When that happens, don’t wait for your employees to bring it up. Be proactive.

Let them know that raises are frozen — and explain why. “This year, we’re focused on keeping every job secure. That means tightening some areas, including salary increases.” That kind of transparency, offered before disappointment festers, builds long-term trust.

And if an employee does come to you feeling underpaid — and you either can’t increase their salary or don’t believe it’s warranted — don’t get defensive. Instead, encourage exploration. In such a scenario, I’ll say something like: “I want you to feel good about where you work. If you think there’s a better fit financially, go see what’s out there — and then decide what’s best for you.”

This isn’t a dare; it’s an invitation. And it’s often clarifying. Many employees return with a deeper appreciation for what they already have. And if they don’t, they leave on good terms.

Bonuses: The Performance Lever

IF compensation is the floor, bonuses are the performance lever — the extra lift that tells employees: You went above and beyond. And we noticed.

Bonuses can serve many roles: a direct reward for revenue generation, a collective thank-you at year’s end, or a tiered acknowledgment based on role, time, or contribution. But no matter the form, the principle remains the same: Like raises, bonuses work best when they feel earned, not expected. What once felt generous quickly becomes routine.

The psychology here is simple: Humans acclimate quickly to good things. We raise our internal baseline, and what once felt like a gift now feels like the bare minimum.

A parenting coach I know explained why she avoids fixed allowances. “If my kid gets five dollars every Friday, they stop saying thank you. But if they randomly find ten dollars on their bed with a note? That lights them up.” The same holds true in the workplace. Scheduled rewards fade. Unexpected ones leave a mark.

The Difference Between Basics and Bonuses

In the 1950s, psychologist Frederick Herzberg introduced a radical idea: What makes people unhappy at work isn’t the same as what makes them thrive. That distinction still holds up today.

Herzberg divided workplace factors into two categories: hygiene factors and motivators.

Hygiene factors are the basics — salary, job security, working conditions, policies, and interpersonal relationships. When they’re missing or mishandled, people are dissatisfied. But even when they’re excellent, they don’t necessarily make people more satisfied. They create a neutral baseline. No one celebrates that their paycheck cleared. But the moment it doesn’t, everything erupts.

Motivators are different. These elements create engagement, fulfillment, and long-term loyalty: achievement, recognition, responsibility, and opportunities for growth.

It’s crucial to ask yourself which items you offer your workers fall into each category. If you employ many frum women who accept a lower salary because you offer flexible hours or Chol Hamoed off, then realize that if you take them away, you’re not “trimming the extras,” you’re stripping the foundation.

Ensure that the hygiene factors are always in place, then work on the motivators.

Drip and Rip

Beyond the size of a raise or bonus, timing plays an outsized role in how people experience reward and loss.

Behavioral economist Dan Ariely explores this in Predictably Irrational, where he introduces a powerful principle: drip the good, rip the bad.

It’s rooted in the concept of hedonic adaptation — our natural tendency to quickly adjust to improved circumstances. A significant upgrade may spark short-term excitement, but it doesn’t take long before the new normal settles in and the novelty wears off.

Ariely’s recommendation? Spread out the good. Whether it’s perks, bonuses, or workplace improvements, pacing them allows each one to feel distinct and appreciated. Drip the good stuff slowly, and the positive impact lasts much longer.

Losses, on the other hand, don’t work that way. When cutbacks are rolled out in stages — a slight reduction here, another a few weeks later — it keeps employees in a constant state of disappointment. Morale erodes drip by drip.

A single, decisive cut might be painful in the moment, but it offers clarity, closure, and a faster emotional recovery. People can adapt to a new reality; what they struggle with is not knowing what’s coming next.

You should also give a lot of thought regarding which cuts are wise, and which cuts will “cost” you far more in the long run.

A friend worked in a high-end design firm that tried to save a few bucks by downgrading their coffee. Gone was the premium roast. In its place were sad tins of low-grade instant powder.

After just a few days, an employee who sat near the kitchenette approached management.

“Look,” she said, “I get that sometimes you need to cut back. But every single person in this office now starts their day by grumbling about the coffee and how cheap the firm is. Is whatever you’re saving worth having your employees gripe every morning?”

The following week, the good coffee was back.

Perks: The Retention Glue

WE tend to treat perks as secondary — nice if you can afford them, irrelevant if you can’t. But they’re often doing more heavy lifting than we realize. While compensation handles survival, perks shape identity. They turn jobs into places people want to be.

When one employee put in long hours covering for several team members during a high-pressure season, I sent her a generous gift card for a popular toy store, so she could enjoy treating her kids. She gave her time to work; I wanted both her and her children feel appreciated.

A former boss of mine would treat employees and their spouses to dinner after major projects. “You both carried this,” the gesture said, “thank you.” These small perks don’t show up on balance sheets, but they do show up in morale and loyalty.

And not all perks require a budget. Sometimes, time is the most valuable gift you can give. Letting staff work from home on Fridays, offering a late start on summer Mondays (or Sundays in Israel), or giving a day off between Rosh Chodesh Nissan and Erev Pesach create workplaces people want to stay in.

The impact multiplies when those perks extend to family. Can teachers bring their kids on class trips? Can staff members’ children attend school productions without paying for tickets? I know schools that pool resources to rent out an amusement park over Chol Hamoed — and invite all employees and their families to enjoy, free of charge.

Then there’s swag, which only works if it’s something people actually want to use. Not another scratchy tote bag. But a warm branded sweatshirt, a sturdy backpack, or a sleek water bottle? These are wearable reminders: I belong here.

And one of the most powerful perks isn’t physical — it’s opportunity. Letting someone lead a project just slightly beyond their current abilities while giving them the tools to succeed. Pairing them with a strong mentor. Giving them a résumé-worthy assignment or investing in their professional development. Whether your industry is high-tech or handmade, every field has more to learn. And when employees feel like they’re learning, they feel like they’re growing — and that’s priceless.

Here’s the catch: Not every perk works for every person. Victor Vroom’s Expectancy Theory lays it out clearly — people are motivated when they believe their effort will lead to results, those results will lead to rewards, and those rewards are things they care about. If even one of those links is weak, motivation fizzles.

That’s why the best managers don’t just hand out perks. They listen. They observe. And they tailor benefits to what their team members want most.

Money isn’t everything. But in the business world, it touches everything. How you pay, reward, and support your team speaks louder than any mission statement. When those messages are clear and thoughtful, people respond with trust, effort, and loyalty.

Why Big Bonuses Might Backfire

The logic seems obvious: offer a bigger reward, get better performance. But Daniel Pink, in his bestseller Drive, says that logic doesn’t always hold up. When the work involves thinking, creating, or problem-solving, large bonuses can do more harm than good.

Pink draws on decades of research — including well-known studies from MIT and other global institutions — to show that for complex tasks, “if-then” rewards often reduce performance. The pressure to perform chokes innovation. The focus on the reward narrows thinking. And when bonuses feel arbitrary or unfair, they don’t motivate — they demoralize.

So what does work?

In a previous column, we explored Pink’s model; he sees autonomy, mastery, and purpose as the primary motivators. When these needs are met, people bring their whole selves to the job. When they’re ignored, no bonus can fill the gap.

That’s not to say you should never use financial incentives. However, the best systems reward teams, not just individuals. They’re tied to shared goals, not just personal gain. And they’re offered in the context of trust, not pressure.

(Originally featured in Mishpacha, Issue 1062)