I recently ran across an article in the Economist about competing for talent that I thought did a great job highlighting a variety of non-monetary ways high performing companies engage employees.
Here are a few examples:
- Collaborating at Zappos to improve the community with a view to attracting higher caliber recruits to the area. -> Can I just say, that’s really forward thinking.
- Free food, tax advice and pre-natal classes for expectant fathers at Google.
- Letting people work on whatever they want 20% of the time at Intuit
- Unlimited holidays at Netflix.
- Internal talent development, sustainability and team weight loss at Walmart.
- Inviting 50,000 employees to participate in a strategy discussion at Infosys.
- Community outreach at AT&T.
- And let's not forget brains in a jar at Proteus.
These are all great ideas and it’s exciting to see companies thinking creatively about how to improve employee engagement and productivity.
But I also came across a couple of articles that reminded me we shouldn’t be too quick to dismiss money in the engagement equation:
According to the first article, Salary v. Sleep, most people surveyed would work more hours and give up sleep for a higher paying job. This is interesting in view of recent research on how little impact money has on happiness or motivation. Mind you, the extra money offered was pretty big.
The second article, Pay for Performance Doesn’t Work for Generation Y, cautions that Generation Y has high current expenses and little faith in the long-term viability of most companies or company-sponsored savings plans… so they want the cash now. If this is true, offering growth opportunities to millennials won’t stop them from jumping ship as soon as someone else offers more money.
The same article also offers an amusing behind the scenes look at the typical pay for performance process, which highlights the absurdity of investing so much organizational effort into a microscopic salary increase.
So what should we take away from this? First of all, paying for performance has higher motivational power when you have some real money to spend and can differentiate between top and average performers by more than half a percent.
The next thing is that there’s far more to motivation than money and companies that neglect to create a positive work environment will wonder why they lose their best people.
And finally, the motivational power of non-monetary rewards such as recognition, free food, learning opportunities and sponsored community service work best when combined with a generous salary.
In other words, to retain and engage your top talent you have to pay them well and treat them well.
Amazing, I know.
Laura Schroeder is a global talent specialist at Workday, headquartered in Pleasanton, CA. She has nearly fifteen years of experience envisioning, designing, developing, implementing and evangelizing global Human Capital Management (HCM) solutions and holds a certificate in Strategic Human Resources Practices from Cornell University. Her articles and interviews on HCM topics have been published in the US, Europe and Asia. She lives in Munich, Germany and enjoys cooking, reading, writing, kick boxing (well, kicking things) and spending time with friends and family. If you want to read more from Laura, check out her talent management blog Working Girl or follow her on Twitter @WorkGal.
Nice to see that economists are reading material that accurately reflects our tradecraft findings. Extra money isn't much of an incentive (in and of itself) unless it will change your lifestyle. Absent handsome sums, a lot more weight needs to be placed on process, total rewards and non-cash remuneration mechanisms.
Posted by: E. James (Jim) Brennan | 10/12/2011 at 11:25 AM
@Jim - Exactly. It's a never ending process to find the right balance: Look at the cash. Look at the non-cash. Now look at the cash again.
Posted by: Laura Schroeder | 10/13/2011 at 03:40 AM
Like many one-over-the-world articles, the theory of engagement is correct, but its execution by U. S. businesses is lacking. Agree that the non-monetary examples cited are, for some businesses and employees, organizationally do able and appreciated. But for some. nay perhaps many or most, the non-cash inventives are rejected outright. "It's not in the business model" as I was told recently. Translated: it would take away profits for owners or company executives. Many non-cash perks are a dream for those in the retail, service and hospitality sectors. Employee presence/effort on-the-job, not elsewhere, is the only thing that counts to bean-counter owners. For workers in these sectors, it's pay that counts, and counts, and counts, etc. Many of these workers are earning minimum wage and are eligible for government support programs. A raise of 25 cents/hour, as our manager approved this week, clearly demonstrates that many business executives still believe, and continue to propogate, class warfare. Data available from the BLS also shows that workplace benefits, once seemingly part of the normal compensation package, are being offered by fewer and fewer employers. In many sectors, (see service/hospitality above, for example) the norm is no benefits whatsoever. We have line-level/hourly-wage employees who have served for 20-30 years who have never been offered one day of paid vacation/time off, etc.
Posted by: JMG | 10/13/2011 at 11:28 AM
Beg to differ on the generalized "class warfare" implication which is not justified by the facts. Different cultures operate differently. Here in the States, "class" is defined more by achievement level than by birth: in that narrow sense, the accusation is correct. Those who have no (or limited) marketable skills stand at great economic disadvantage to those who do have knowledge, skills and abilities (KSAs) that are in demand. Great shortages continue to exist for many talents.
That said, the indignation is righteous against the callousness of those privileged by virtue of their achievments who treat their employees in such an unAmerican way. It should be noted that there are more charities, foundations and other non-profits guilty of those "mistreatments" than for-profit businesses who are required to produce dividends for their shareholders who are frequently unions, charities and foundations. The tragedy of the commons is always more complex than a simple them versus us scheme.
Posted by: E. James (Jim) Brennan | 10/20/2011 at 03:29 PM