Is Money the Only Way to Reward Staff?
With global business in the middle of an employee engagement crisis – according to Gallup, a pathetic 13 percent of employees are actually engaged at work — HR teams are struggling to find new ways to attract, engage, and retain staff.
When the going gets tough in hiring and retention, many employers are tempted to go back to basics and focus on engaging and retaining employees through financial rewards. It’s no surprise that we have seen a rise in excessively large job offers delivered to candidates with an impossibly short amount of consideration time before the offer self-destructs — e.g., “sign on the dotted line in the next 12 hours or the offer will be withdrawn.” These tactics may be unethical, and they may place too much pressure on candidates, but it’s not hard to understand why employers are so fixated on financial reward. Money is a key motivator in the new-hire negotiation process, and it’s a key reason why people leave.
But it may be shortsighted to build a reward policy entirely around financial components, as this overlooks some equally important non-financial rewards that can be just as motivational. Ignoring non-financial rewards could render your reward policy more expensive than it needs to be and less effective than it could be.
What do I mean by this? Well, according to a fascinating white paper by the Ivy Business Journal, motivational processes have changed significantly to reflect new work requirements and evolving employee expectations. Key changes include the rising importance of psychic or intrinsic rewards and a decline in the importance of material or extrinsic rewards, like pay and bonuses.
Now, I am not saying that people want to work for free. Job adverts paying zero dollars or way below market rate will fail generally. Pay is important, but non-financial psychic motivators are growing in importance and are generally underestimated by managers. Just look at the rise of open-source software initiatives and wikis where people work for free, motivated by intrinsic job-related factors, not money.
These instrinsic/psychic reward motivators are potentially very powerful and play a central role in employee engagement, but what are they? There are four intrinsic motivators: sense of meaningfulness, sense of choice, sense of competence, and sense of progress. Each of these contributes heavily to employee engagement.
Can you be sure that the roles/employees in your business have some or all of these intrinsic motivators? Do employees do meaningful work? Do they have choices? Do they feel competent? Do they feel they are achieving things? If you can’t answer yes to these simple questions about most of the roles/people in your business, then you are probably neglecting intrinsic motivation severely, and you are likely to have sub-optimal engagement levels as a result. Not only should your jobs contain intrinsic motivation, but you should reflect that fact in job advertisements if you are to attract and retain top talent.
Money is without doubt a key way to reward staff, but it is just one piece of the jigsaw. To maximize staff engagement, employers need to ensure that their employees receive non-financial/intrinsic/psychic rewards too. If you want an idea of some powerful non-financial/psychic rewards that drive motivation, read my earlier article, “5 Ways to Reward Staff That Don’t Require Much Money.”