A recession means Ferraris don’t leave the showroom and Prada dresses stay on store racks. People can’t afford or justify splurging on grand luxuries. A similar effect happens in the workplace – employers can no longer justify salary hikes and expensive perks for their employees.

During times of economic uncertainty and stress, people turn to cost-effective luxuries to lift their spirits. The Lipstick Effect and Recognition Effect are great examples of how recessions affect human behaviour and needs.
Lipstick as an economic indicator

The Lipstick Effect was coined during the Great Depression to explain a marked increase in lipstick sales despite the crumbling economy. Women could no longer buy pricey clothes so they turned to the one luxury item that made them feel good and didn’t break the bank – classic red lipstick.

The Lipstick Effect theory was proven when lipstick sales doubled in the months following the 9/11 terrorist attacks in the United States. Fast forward eight years and we are seeing the same phenomenon.
Recognition as a workplace indicator

Statistics show that as the Dow Jones and consumer confidence fell between January 2008 and January 2009, peer-to-peer recognition awards in the workplace skyrocketed. As employer confidence falls, the need to give and receive meaningful recognition goes up. It’s a natural reaction and a healthy one!

Recognition in the workplace should be encouraged by employers because it helps rebuild fragile workplaces and promotes teamwork. It’s important that employers push for peer-to-peer recognition, meaning bottom-up, in addition to more traditional top-down practices like employee of the month awards.

A simple thank you from a colleague makes others take notice of the positive things that happen everyday. That’s something to smile about.