Employee Engagement Starts with Compensation

Money, in the form of salary and benefits, could be standing in the way of your efforts to produce a more engaged workforce.

Reasonable salaries and thoughtful benefits must be the foundation of any employee engagement program. Without this footing, employees are automatically distracted.

Consider that the salary negotiation process is often the first time a potential employee expresses her basic terms for being successful in the new role. A bruising pre-employee salary negation takes a long time to heal. On the other hand, a thoughtful counter-offer could also reveal engagement opportunities, deliver clarity around the job description and set a clear path for career growth.

Some companies have gone as far as taking money off the table – thus making salary a non-issue – by paying employees what they want to be paid and putting in place benefits and rewards that drive engagement.

To ensure money issues doesn’t prevent employee engagement, let’s unravel the compensation and engagement knot.

The Twisted Relationship between Money and Engagement

After several years of salary and benefits being frozen, cut and rigidly defined, employers are starting to refocus on the role money plays in facilitating engagement. Dan Simovic, chief executive of TAMS (Talent Assessment and Management Services) Group reports that many of his recent projects focus on salary and rewards programs. For these employers salary is not just an attraction and retention tool, it’s also an engagement tool.

During the most recent recession, some companies financially fortified themselves but neglected the implications on engagement. For instance, many organizations that rapidly grew through merger and acquisition activity were focused on delivering bottom-line results, thus delaying investments in culture and systems integrations. Years after the deals were inked, commission and bonus structures, titles and job descriptions and career pathways still have not been aligned.

TAMS Group is working with several such companies that finally realized that the administrative burden of managing multiple pay scales, governance systems and naming conventions were only part of the problem. What drove management to take action was that “the conflicting messages sent to employees hamper engagement and are a huge distraction that reduce productivity,” said Simovic.

This is a major shift. In leaner times engagement was viewed as a cheap way to replace the salary and benefits they were cutting. Somewhere “employers got the idea that if people were happy at work, they wouldn’t need to be paid more,” Sean Williams, owner of Communication AMMO said. This was the era when managers were prompted to smile more, thank their employees and institute other free methods that ostensibly drove engagement by making the workplace a more pleasant environment.

Creative and Responsive Rewards

Beyond salary, employers and employees alike have come to recognize that total rewards deliver lifestyle benefits that fuel engagement by providing some relief from the pain-points that cause employees to miss work or be distracted.  During salary negotiations, recruiter Simovic has noticed an increase in requests for flex time, work-from-home arrangements and other special scheduling considerations.

Taking it a step further to the company’s entire workforce, responsive benefits empower employees to adapt the program to their preferences. For instance, in one location, employees might select wellness benefits that include discounted fitness center memberships. In another it might take the form of free healthy snacks in the break room.

“Involving employees in making decisions about their work environment and perks creates a sense of ownership and also ensures the benefits are appreciated,” said Jesse Lahey, managing principal of Aspendale Communications.

The combined product of such an effort is increased engagement.

Beyond benefits, employees are demanding more transparency about their individual career paths. During pre-employment negotiations and after some time on the job, employees are asking for “clarity about their career trajectory and want to be given goals that ensure continuous learning and growth, reports HR expert Simovic. While not traditionally considered a benefit, clear-cut career path is an incentive that is valued by employees.

Also appreciated by employees is a commitment to their education and development. Where coaching was previously used as a step toward firing a problem employee, now employers and employees alike view coaching as “a strong signal that the company is appreciative of the employee, is investing in her and wants to see her succeed, said Simovic. Coaching is no longer a response to a crisis, but a proactive investment in a leader.

Money Alone Won’t Cure Engagement Issues

Above average pay and benefits aren’t replacements for other engagement activities, although some companies have tried to take this shortcut. Employee engagement expert Lahey has seen “companies with the cash to do so attempting to throw salaries and bonuses at their engagement problems.” While this phenomena might sound attractive on the surface, it’s likely that the corporate culture is so damaged in these scenarios that no amount of money is enough to make people feel good or work harder.

Think of benefits and compensation as a foundation for engagement; they are necessary for a strong relationship between employer and employee. Although they’re not a cure-all, organizations would be wise to address compensation and benefits as part of any employee engagement effort.

If you want to learn more about achieving authentic and lasting engagement, start by building your leadership credibility. Download the free eBook Character Trumps Credentials: 171 Questions that Help Leaders Tell Great Stories that Influence, Engage and Inspire.