Re-Engaging Your Employees

According to various surveys more than half the workforce is dissatisfied and/or planning to leave, not to mention quite a few HiPos, and pretty much everyone wants more money:

• 55% of full-time employees plan to make a career change, seek out new employers or go back to school once the conomy recovery is under way – May 2009, Robert Half International and CareerBuilder
• 25% of high potential employees are searching for a new employer – Executive Guidance for 2010, Corporate Executive Board
• 66% of American workers are not currently satisfied with their compensation – September 2009, American Workplace Incights Survey, Adecco Group and Harris Interactive

This isn't all that surprising.  These days even highly compensated employees are struggling with rising living costs, frozen or reduced salaries and even loss of savings.  And although the overall job market remains cautious, the fact is that people with ‘hot’ skills will be in a position to find higher paying job as the economy recovers. 

And those without tradable skills?  Well, unfortunately from a company performance and branding perspective, they’re most likely to hang around wishing they could go somewhere else. 

So, there are plenty of great reasons to be thinking about employee engagement right now and the good news is that money still talks, although many of us wish it would speak up a bit.  The other thing to keep in mind is that when money talks too much people tend to stop paying attention so the smart money isn't just on money.

With this in mind, here are some guidelines for optimizing rewards strategies:

• Demographics -  Different rewards speak differently to different people.  For example, people under the age of 35 tend to prefer a more collaborative work style that allows them to gain experience with a safety net, whereas people over the age of 35 may be more experienced and place higher value on autonomy.   Single parents may prioritize flexible work hours over salary and other types of rewards.  Local taxation laws make some rewards more attractive than others.  Companies that don’t have basic demographic information about their workforce may be investing in the wrong rewards.

• Competitive Analysis -  If you don’t already do competitive analysis, now’s a good time to start.  If more than half of your workforce is planning to search for greener pastures, who are you competing with and what do they offer?  Also keep in mind that money isn’t the only thing that talks, i.e., people may accept less money in return for flexibility, stock, span of control, training, growth opportunities, free childcare, you name it.  Know thy competition.

• Base pay -  In their book Pay People Right Zingheim and Schuster argue that base pay should be compensation for ongoing value, whereas variable pay should be used as pay for results.  That seems pretty clear but there’s still the little matter of deciding where to draw the line.  There are lots of opinions about this but for what it's worth, research shows that the most highly performing companies are not necessarily the highest paying companies.  Instead they are the companies that focus on leadership, teamwork and career development. 

• Variable pay – When it comes to rewarding performance, it’s not just important to decide who gets rewarded for what, but also how rewards will be distributed.  Most companies pursue one of two strategies when it comes to rewards: 1) Wealth distribution; and 2) Wealth creation.  I recommend reading ‘Making Employee Bonus Plans Pay Off’ by Ann Bares for additional information, but essentially the wealth distribution approach passes out rewards based on company performance, whereas the wealth creation approach commits to certain rewards up front if business goals are met.  The advantage to the second approach is that it pays for itself.

• Two-way communication – We know that communication is essential when it comes to rewards and by and large companies are getting better at outbound communication of rewards strategies.  However, inbound communication continues to lag, i.e., soliciting feedback from employees and managers about what worked well and not so well so the process can be improved with each cycle.  It has arguably never been more important to reward with intent so feedback is an essential component of compensation planning.

• Beyond compensation - It’s pretty well established that once you pay people enough, adding more money doesn’t add more motivation.  In other words, money talks but other types of rewards may cost less and motivate more, such as financial advice, free lattes, flexible work arrangements, extra vacation, training, career opportunities, a terrific manager or a great company culture.  

When you get right down to it, employee engagement is about how companies manage talent, which includes planning for the future, building or acquiring the skills needed to be successful and being an attractive employer that good people want to work for.  Compensation is an important piece of the talent management puzzle that is most effective in cooperation with other pieces. 

Picture courtesy of Taiga Company.

Laura Schroeder is the Product Manager for Compensation Solutions at Workday, headquartered in Pleasanton, CA.  She has more than twelve years of experience designing, developing, implementing and evangelizing Human Capital Management (HCM) solutions in the US, Asia and Europe.   Her articles and interviews on HCM topics have been published in national and European trade journals.  She currently lives in Munich, Germany and enjoys reading, writing and spending time with friends and family.

Comments

[David Janus]

Your point about two-way communication is a good one; it's also one that often gets ignored.

According to the recent Deloitte/CEBS survey on 2010 total rewards priorities, 48% of companies plan to take inbound communications -i.e., asking employees what works, what doesn't, what they value - more seriously.

One point to add to what you wrote - it's important to remember that when an organization decides to actively solicit input it's critical to "close the loop" and ensure that respondents get some sort of feedback. Respondents who don't get feedback usually feel that their input went into some sort of black hole and, usually, feel worse than if nobody had solicited their opinion in the first place.

[Harold]

Laura,

Great job of insightfully analyzing the work experience. I particularly like the comments on "beyond compensation".

You are to be given credit for speaking out in the anti-Pink environment of this website and its allied bloggers.

Be prepared to duck!

Harold