When I wrote Golden Carrots Don’t Produce Employee Engagement last year, little did I know just how much this would ring true for 2016. At that time, employers were just beginning to wake up to the critical nature of employee engagement, spending close to $720 million in programs and incentives. The problem with focusing only on engagement levels is that it doesn’t honor the bigger picture. Compensation is more than just developing incentive plans and giving people small annual raises. It’s so much more.
Top Performance Companies Lead the Way with Comp Practices
As we rolled out the PayScale 2016 Compensation Best Practices Report, a study of nearly 7,600 global respondents, something became glaringly clear: Modern pay practices are successful at creating prosperous businesses. Top performing organizations seem to get this. They understand that, in most cases, cash is king. In fact, the CBPR indicated that in 2015, “90 percent of top performing companies gave their employees pay raises as compared to 84 percent of average companies.”
Where’s the Breakdown?
We still have a long way to go as there are major gaps in what companies believe they are doing right and how employees perceive things. Our research shows that while, “73 percent of employers consider their employees paid fairly, only around 36 percent of employees feel the same way.” The number one reason why employees leave for greener pastures is for more money, and this has been the same story for 5 years. What’s happening and where is the disconnect occurring?
Many of my peers and I believe that the breakdown has to do with what employees expect and what human resources is able to promise during performance reviews. While there are companies that are confidently raising salaries, there are still those that are cautiously giving out bonuses and raises to their workforce. Employees are shopping around and they are far more educated about their worth than ever before. They know that they can leave company A and get paid more by company B.
PayScale research shows that control over compensation structures is about 50/50 between HR Leaders and CEOs. The smaller the company, the more that the CEO controls this aspect. It makes sense that larger top performance firms would have a more progressive approach to dolling out additional compensation since HR is in the power seat.
Understand that Cash will Always Be a Factor in Motivating Employees
It’s up to Human Resource leaders to continually inspire and engage employees using a variety of motivating factors. At the top of that list should be an effort to prove that they are compensating every employee well based upon his or her worth. Sure, other benefits and perks help too, but cash will always be first.