It’s no secret: the workplace is an ever-evolving landscape. This is especially true when it comes to compensation programs. Traditionally, employers are concerned with ensuring that their pay practices are competitive, equitable, and legally sound. Less often, though, do employers actually step back and consider what their compensation philosophy might indicate about the company as a whole. Are we using the right means to attract the talent we seek?
This may be a controversial statement: “Cash may not, in fact, be king.” We all expect to get an honest wage for an honest effort. However, I submit that “wage” in this case may not actually have the classic definition. Let’s face it: How Can We Update our Compensation Program? By David Holden, MBA cash is important, if not required. But it is not necessarily the “be all, end all.” Employees are becoming more complex in what actually motivates them, both extrinsically and intrinsically. And I would argue that pay programs are unlikely to encourage natural or intrinsic motivation. Monetary awards may actually send mixed messages and have unintended consequences. Strict cash programs typically cause employees to try to tip the scales in their favor regardless of the fallout. Oftentimes, these very programs have the opposite effect—demotivation.
Compensation professionals should consider linking awards to other benefits. For example, how can we leverage peer recognition as a tool?
Studies have shown that this utility type of recognition may actually be up to five times more valuable than an actual monetary award. There are a myriad of other means that can be used to attract top talent, many of which lately center on the one thing that is arguably the most valuable thing that can be offered—time.
Think about how powerful a message it sends to employees if you could offer them more time. When is the last time you encountered somebody that had more time than they knew what to do with? My experience is that those individuals are few and far between— and they are envied. I suspect that the traditional paid time-off arrangements that are out there are often taken for granted. It seems to me that the award of time is virtually invaluable. Flex time, comp time, volunteer time, time with your family or friends, time to be alone or start that hobby you’ve been putting off because you did not, well, have the time! Given the choice between a (or another) gift card recognizing a job well done or the “rest of the afternoon off,” I venture to guess that most people would opt for a gift of time.
To an employer, compensation is generally viewed as the value of a job role. Conversely, an employee may view this as how they are valued. In that spirit, is there a better way to demonstrate the value of employees than to offer them a variety of compensation tenets? Whether they are dealing with aging parents or young children, the demands and responsibilities of employees’ personal lives weigh heavily on many. A prudent employer might consider how they can send a powerful message by advocating and supporting these employees through their rewards programs, thus helping to attract and retain the best and brightest available.
Similar to this phenomenon is the Millennial. These folks desire to be in the action. They want to do! And heaven forbid if your reason for doing something is because it’s the “way we’ve always done it.” Millennials are all about exercising their right to freedom—in everything they do. They will strive to find, have, and retain a work life balance. This should not be confused with a lack of desire to work. They just require more attention and feedback than previous generations. Recognition is a powerful form of compensation to them. They put tremendous value on flexibility and having the option to balance their personal and professional lives—generally in that order. Family is important. Community is paramount. And having the freedom and employer support to determine how to best balance the demands in their lives of their time is priceless.
There is no silver bullet in compensation. Employers must be diligent in the components of their program to ensure that they are scalable, agile, and motivating their employees. As the population continues to evolve, so should the levers used to engage and influence for the highest performance. Recognition, training opportunities, security, and work environment—none of these should be overlooked. But none of them work effectively on their own.