What is the link between compensation practices and work team engagement levels?
In my work life, I have learned that money is much more of a demotivator than it is a motivator. In other words, I don’t think money is the primary, or even the secondary, reason why people do things that one expects of them at work.
Instead, I strongly believe that people quickly lose motivation if they think a compensation system is not fair. That said, one mechanism to increase engagement levels lies in the structure of your compensation work system.
What types of compensation differences exist between company levels? Who gets the perks and who doesn’t? What perceptions exist relative to what one must do in order to become a ‘have’ versus a ‘have not’?
What types of pay rate, benefit, work environment, and recognition differences exist across the organization? Why do they exist? How do these differences affect team engagement levels?
High performance organizations use compensation work system best practices to help drive up team engagement levels. One key practice involves the extension of some form of profit share to all employees, not just those at the top. Similarly, formal recognition for team success exists for all work teams.
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Fairness matters most relative to compensation work system design impact on engagement levels
Most importantly, strive to design a fair compensation system. Appropriately recognize each employee for the contributions they make to organizational success. Don’t base recognition simply on one’s job title. Unfair, or poorly deployed, compensation systems drive down engagement levels.
The “What’s in it for me?” question is very pervasive and powerful. Plus, it focuses on much more than pay. Be sure to look at other forms of compensation. Examples far too many companies ignore include the work environment, formal recognition opportunities, and benefits.