- Blog post
Reward Employees Through Non-Monetary Compensation Programs
Compensation Programs Work In Tandem With Employee Recognition to Reduce Turnover
Compensation people are famous for saying their job is to design, implement and administer compensation programs that attract, retain and motivate a sufficiently qualified workforce to achieve the company’s financial and strategic objectives. There are lots of things that we could do and still motivate a sufficiently qualified workforce to achieve the company’s that don’t cost a lot of money.
When an employee signs up to work for a company, they get other things besides cash and stock. And to the extent that we can satisfy those needs through recognition and non-monetary methods, it will take some pressure off compensation programs. For example, if you have a high turnover rate which a number of companies, there’s always a tendency to think that it’s a compensation issue and comp people get approached a lot by turnover problems.
Since compensation programs are the largest expense most companies have these days and revenue minus expenses equals profit and you’re trying to get the greatest return for your investment in compensation programs, there are other things to consider that are non-cash kinds of things and people actually want this. Sometimes just a pat on the back is all you really need to do.
Where do we need to set our cash and stock levels to attract, retain and motivate but to the extent that we’ve got other things going for us where we do have things like challenging work, learning opportunities, flexible schedules, good managers and co-workers.
And a belief in the organization mission takes pressure off of the compensation area. It’s one of the reasons non-profit organizations are able to pay maybe 15% lower compensation rates than for profit companies and attract reasonably good people for that. But one of the things they’ve got going that lots of employees search their entire career for is work of a social redeeming value. That what we do actually makes a difference in the world and that it’s valuable in some way. To the extent that you can actually define what that mission is and get everybody behind it — it’s a way of taking some of the pressure off of compensation programs and possibly reducing your turnover rates.
These don’t seem very difficult things to achieve. We have a tendency to not spend lots of time addressing these kinds of things. The types of recognition programs that have been popular, length of service, above and beyond performance, it could – some sort of pat on the back, sales, suggestions, employee of the period, et cetera.
So employees’ top forms of recognition in one survey were: praise from their manager. They just want to be told they’re doing a good a job. Providing information to employees to do their job, involving employees in decisions, asking employees about their opinions, supporting them when they make a mistake, autonomy, allowing them to pursue ideas on improving things, what’s wrong with that? Give them a choice in work assignments, flexible hours, again, and learning and development opportunities.
Edited Remarks from “The Seven Deadly Sins of Employee Compensation Plans (and How to Fix Them)” by Rick Olivieri