Employee compensation needs to focus on many areas

by on June 26, 2009 · 0 Comment POSTED IN: HR Info Center

In employee compensation, managers need to look at both intrinsic and extrinsic rewards

Now, if you think, how do I apply that? You really have to have people focused on the go. Your objective is to track, retain and motivate employees. The employee compensation and incentives have got to be kept in perspective.

They need to focus on — in addition to the monetary reward in employee compensation, that the need to reward people fairly to make sure they’re fairly compensated. You’ve also got to focus on the non-financial aspects of employee compensation, the degrees of things that are the intrinsic ways of motivating people, the recognition, the sense of community, the sense of accomplishment. It’s not just for the money that they’re working.

Intrinsic employee compensation
I often tell people that — the people that work for me, often could go make 20 grand more working for somebody else. And if I don’t have people that aren’t worth more than — if they’re not the most valuable people, then I probably don’t have the right people.

Why then would they stay working for me at less money? They get paid more than just the monetary employee compensation. We want to make sure that they’re rewarded fairly, that they’re paid fair for the market, but we also want to make sure we recognize them, make sure that they feel part of a team, part of a sense of community. And they feel like the work that they’re doing is accomplishing something, that it’s meaningful work.

And if we do that, we create the right kind of environment to keep people motivated and keep the reward part in perspective in terms of what’s out there.

The first thing in your employee compensation plan design
So, the first thing is really, when you’re starting to design your employee compensation plan, you have to fundamentally ask yourself the questions, what are we trying to do? What behaviors are we trying to motivate? How do we view our people and how will they respond to these incentives and rewards?

And you have to get real deep in to understanding, am I creating a situation where I’m assuming these people are machines that need batteries or I’m assuming that they’re self-motivated. They’re generators. And I need to make sure that I continue to maintain that generation.

In one setting, when those external factors, what you’ll often find is management’s job is tough, because you’ve got to be the battery charger. You’re recharging your people all the time.

In the intrinsic setting, you’re in a situation where they’re charging you because they’re motivated with what they’re trying to do.

Edited remarks from the Rapid Learning Institute webinar: “How to Avoid Incentive Pay Plan Disasters” by Steve Player

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