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The only reward my employees recognize is money
What do employees want?
It is said by many experts citing survey data that money is not the most important thing to employees. A new study examining factors driving employee engagement found that flexibility, corporate culture and rewarding high performance were ranked most important to cultivate happy and productive employees, according to the Q2 2013 Engagement Study commissioned by Randstad, the second largest HR services and staffing company in the world.
But what do you do with those employees that are satisfied with nothing less than a salary increase? The ones that don’t accept accolades in an annual appraisal unless it is accompanied by a raise?
Try to avoid the problem in the first place
If you have salary scales set for the different positions in your organization be sure to review them regularly to be sure they are indeed fair. Compensation trends change, and your maximum salary may suddenly be significantly less than the company down the road. Be on top of this BEFORE your employees have to point it out to you. At minimum, salary ranges should be reviewed annually.
Before you hire the employee make sure they know the pay scale for their position. Let them know what the maximum salary is, and what happens when they reach it, to avoid unpleasant surprises. Also let them know how you go about regularly evaluating the job's salary range, and how often you will be able to change it.
An alternative to continuing salary increases
All businesses must define the maximum monetary value of each job and know the top dollar that they can afford to pay employees in each position. At the same time, there should be some sort of reward for an employee at the top of their salary scale who continues to do an outstanding job. Obviously you cannot keep giving employees raises. Pretty soon they would be making more than the owners of the company!
For years I have used a longevity bonus formula for this purpose. It can be a standard amount, but I have preferred to use a formula whereby I calculate what the annual salary increase would have been had the employee been eligible for a raise, cut that amount in half, and pay it out as a lump sum. I have found that some employees actually prefer that bonus to an annual increase which, although of higher monetary value, must be earned throughout the year.