Stepping Up & Intrinsic Rewards

In a recent post, I cautioned against automatically using base salary increases as the reward method of choice when employees are asked to step up and take on more responsibility in the wake of hiring freezes and layoffs.  My point was twofold: to make sure that the reward chosen was truly commensurate with the circumstances (i.e., don't apply a permanent solution to a short-term situation) and to be mindful of the precedent being set (that going above and beyond always warrants a salary increase).

In one of the comments to that post, the Cafe's own Becky Regan noted that while it may be important to recognize these out-of-the-ordinary employee contributions, we should also bear in mind that it is situations like these that provide opportunities for employees to showcase their potential and gain valuable work experience.

A recent study sponsored by Accountemps confirms Becky's point - that the chance to step up can be and often is seen as a real positive by employees.  When the 457 workers surveyed were asked "What positive effects, if any, has the recession had on you and your job?", the top positives cited were those associated with "stepping up":

Positive effects of the recession -

• Taking on new projects - 53%
• Gaining more responsibility - 52% 
• Taking on more challenging work - 52%

There are some important lessons for us to heed here; foremost that we shouldn't overlook the intrinsic rewards associated with being asked to take on a larger and more important set of responsibilities.  This isn't to say that it is never appropriate to use extrinsic rewards (but, again, be cautious about using base salary) in these circumstances, but simply that we should remain mindful that the opportunity exists (with the right support and coaching) to turn these situations into positive development experiences for the employees.

As the employees themselves have pointed out for us.

Ann Bares is the Editor of Compensation Café,  Author of Compensation Force  and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She is no longer willing to publicly admit how many years experience she has in the field.  She earned her M.B.A. at Northwestern University’s Kellogg School, enjoys reading in her spare time and is currently trying to decide whether to follow her daughter to China this summer.  Follow her on Twitter at @annbares.

Image: Creative Commons Photo "Juliusturm - last steps to the light" by extranoise

Comments

[Becky Regan]

Ann,
As I'm sure you recognize, the difficulty with giving employees a bump in pay for additional responsibilities is that it's difficult to remove once the duties disappear. Sometimes it's a good idea to let the situation develop for a while before taking any action to increase pay or give a bonus. You can always award an increase or bonus retroactive to the effective date the employee assumed the enhance job duties. If the situation continues with the incumbent assuming those additional responsibilities permanently, then it's time to reward them.

[Wally Bock]

Congratulations! This post was selected as one of the five best independent business blog posts of the week in my Three Star Leadership Midweek Review of the Business Blogs.

http://blog.threestarleadership.com/2009/05/13/51309-midweek-look-at-the-independent-business-blogs.aspx

Wally Bock

[Doug Sayed]

Well said Ann (and Becky). Don't apply a permanent solution to a temporary problem. Base pay is a fixed cost, and variable rewards are not (they're variable!).

I like the Zingheim and Schuster's approach(the authors of Pay People Right!, etc.). They say base pay is for what you bring to work everyday (your skill set, experience, etc.) and variable pay is for results.

So, following this line of thought, if you want to pay for results, or for people "stepping up," we should be doing that via variable pay, not via base pay.

[The Career Encourager]

Great posting - and very timely for a client situation I am dealing with, so I will be forwarding this on to their Leadership Team. thanks for consistently "bringing it" with the best and latest comp info, ideas, and innovations!

[Ann Bares]

Doug:

The Zinheim and Schuster distinction between base and variable pay is helpful and makes sense to me! Thanks for the reinforcement!

Peggy:

Glad that it comes at an opportune time!