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Important post, Dan! This is a vital issue, frequently encountered and much-misunderstood.

Everyone can always make more money working somewhere else. When the shortfall between what you can get on the open market and your actual current pay is small, it can easily be counterbalanced by non-cash considerations. The art of our tradecraft is in creating the appropriately correct balance. “Warm and fuzzies” will go a long way towards making for a wonderful work environment; but they can’t bridge every gap or compensate (yes, it is called "compensation") for every negative variable. When pay gets too low, the amount of stress placed on the employee can build to an unbearable level. There is a limit to the value that can be generated by non-cash considerations, and every new demand placed on those elements siphons off engagement energy better spent elsewhere. Enough small cuts, and you can bleed to death.

Great article and most relevant to the challenges facing employers today. I think it underscores quite a few, "takeaways". One is the compensation level and design, in many cases is not the driver for attraction and or turnover. More to the point, the abilities of managers and leaders to engage and motivate employees, and the work environment they create is. Sometimes managers use short term incentives to motivate and drive engagement as a replacement for this responsibility, not a supplement to it. Your rewards strategy in many instances is as good as your culture and the effectiveness of your leaders, relative to their ability to engage and motivate employees.

@Jim: In these times of tight budgets i wonder if the company with the most cash will be able to buy a staff. I then wonder if they will be able to keep that staff.

@John: One thing I hope the article reminds everyone is that balance is an action, not a static function. As things change you must constantly adjust. (a little preview of an upcoming article...)

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