Within my own area of expertise, I see that predictability in the old “cash is king” argument. I’ve been consulting with organizations on how best to structure – and fund – social recognition programs to create a culture of appreciation and gratitude in an organization for a couple of decades now. During those years, a consistent question on recognition program design was, “Why not just give cash awards? People want cash.”
The answer to that is easy. “Yes, of course they do.” Cash is often the easy answer, but not necessarily the right one. Why? Because cash is the currency of compensation. Recognition needs a different currency.
Recent research from Willis Towers Watson on optimizing total rewards helps explain why. Simply put, no matter how much cash employees receive (in a mix of base pay and bonus), it’s never enough. And only half of your people think it’s a fair amount.
Relying on cash as the sole or primary method of rewarding employees beyond base pay is a never-ending game of racing to a finish line that constantly shifts just outside of reach.
The image above specifically speaks to the importance of rewards for attracting and retaining employees. But that’s not the primary reason why they stay. In a recent study of 2,700 fully employed workers conducted by the WorkHuman Research Institute, employees also report they stay, first and foremost, for meaningful work. (Compensation falls third in the list of “what makes you stay at your company?”)
As I’ve said before, base compensation matters. People need to be paid fairly for the work they do to fund a safe, secure life (the base-level human needs). And we must address their higher-order needs through recognition and appropriate rewards.
So how do we fund those rewards if not with cash? Bonuses given once a year spike an employee’s engagement and experience level for 4-6 weeks, then that becomes the new normal. A far better approach would be to take a small percentage of the bonus investment, break it up, and give it throughout the year in the form of recognition and rewards that can’t disappear in a paycheck but can fund a guilt-free reward experience. Even better, empowering every employee to give those micro-bonus rewards helps create a stronger sense of fairness. Such an approach helps to spike engagement levels throughout the year, while reminding people how their contributions and efforts contribute to the bigger picture.
What is your total rewards mix? How do you address the issue of perceived fairness while also addressing the various needs of complex humans?
As Globoforce’s Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world.He is the co-author of "The Power of Thanks" and his articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.