W all Street execs may bemoan the shrinking of their multimillion-dollar bonuses, but for most companies, from small family-owned businesses to international corporations, raises are out and pay cuts are in.

That’s left managers in a bind. Companies need employees to work harder and smarter than ever if they’re going to navigate the current economic crisis. But with the traditional pay-based rewards off the table, how do you keep those workers motivated?

The good news is that loyalty doesn’t always come down to money. In fact, one of the most significant rewards you can give – sincere appreciation for a job well done – doesn’t cost a thing.

“Anything you do has to be real and meaningful,” says Lani Powell, president of Powell Human Resources in University Place, Wash., USA, and a member of the Rotary Club of Tacoma. “Acknowledge what the employee did, and explain how it helped the organization,” she suggests. “Don’t do it in passing; make a special trip to tell them. If you pass on the praise to someone higher up and have that person also express appreciation, that’s powerful.” But be careful not to overdo it, she says, or employees might feel like they’re being played.

“The key is for the employer to know what motivates his or her employees,” says Jim Evans, president of the human resources consulting firm JK Evans & Associates in Zanesville, Ohio. “For a salesperson, that might be a higher commission, but for others it might mean time off or career growth opportunities.”

Asking employees what they want doesn’t just help managers devise appropriate rewards – it makes each worker feel valued as an individual. “Find out what you can do to improve the quality of their life,” suggests Powell. An employee with children might want a flexible schedule during a daughter’s soccer season, while someone who lives far from the office might jump at the chance to telecommute one or two days a week.

Though management may be tempted to keep a company’s troubled finances private, transparency may actually create a more loyal workforce. “Most employers do a strategic plan for the next few years,” says Evans. “Share those goals with your workers, and show them how they fit in. Making them part of the team is very important.”

Larry Rumming, an employment coach and training consultant on Vancouver Island, B.C., Canada, and a member of the Rotary Club of Nanaimo North, says employees need to see their role in the larger picture. “Teach them what revenue needs to come into the business on an average day for the doors to stay open, and listen to their suggestions on how to achieve it,” he says. One business he’s worked with uses an “idea board,” where employees can write down suggestions. Successful ideas are rewarded with prizes such as extra vacation days.

“Keeping employees informed as to how the business is doing, letting them know the challenges, soliciting their ideas for solving the challenges, and congratulating them when they meet or exceed the targets will go a long way in motivating them,” Rumming adds.

Training is another way to show employees that you support their professional growth. Your business may no longer have a budget for expensive seminars and workshops, but you can encourage cross-training, which allows workers to share their expertise with colleagues in different departments. Employees gain additional skills for their résumés, and the company benefits from having a broadly trained workforce.

There may be no bigger challenge for management than keeping up morale after a round of layoffs. Though a certain amount of gloom is inevitable, the way supervisors handle the process can have a huge effect on loyalty to the company. “The most important thing to do is communicate,” says Rumming. “Let the staff know, as soon as you can, what is happening and why. Do it on a daily basis.”

“Delaying information erodes trust,” notes Powell. “If management lies or sugarcoats the situation, the employees who remain won’t trust them. They will be out there looking for other jobs, and the company loses the very employees they wanted to keep.”

Top managers may be temped to hide out in their offices on the day layoffs are announced, but Powell says it’s crucial for executives to make the rounds. “Acknowledge that the survivors are taking on more work, and make sure they’re OK,” she says. “If an employee sees the VP or CEO stopping by their desk to see if they have what they need to do their job, it has a powerful impact.”

Layoffs also give managers a chance to reshuffle departments and job descriptions. “Consolidating jobs can be perceived as a growth opportunity,” says Evans. Highly valued employees can be offered more responsibility and more autonomy. “If you present it in a positive light, it helps alleviate some of the pain,” he explains. “It also sends a message to star employees that they’re safe.”

If tough times build character, then the current economic crisis might create some particularly resourceful and resilient businesses. “Organizations are getting more lean and efficient,” says Evans. “It’s forcing companies to go back to basics and focus on what’s important.”

Four easy ways to jump-start morale (for free!)

• Ask employees how you can make their work-life balance easier in lieu of a raise. Ideally, do this through one-on-one meetings.
• Be open about your company’s finances with workers, and solicit their advice on how to cut costs. Make them feel that they’ve got a stake in helping the business survive.
• When colleagues do great work, tell them so in person with more than a quick thanks. Even better, have your superior congratulate them as well.
• Devote a day to cross-training, and give workers a chance to request specific skills they’d like to learn. Your in-house tech professionals could teach support staff new software programs, or clerical workers could accompany sales reps on calls.

Elizabeth Blackwell is a Chicago-based writer and columnist for the financial news Web site TheStreet.com.