Ever since pay-for-performance became the vogue, companies have been trying to assess the effectiveness of this philosophy. Indeed, the world of Compensation and Benefits had a significant weightage in the overall performance management outcomes.
Depending on the nature of your industry, pay and benefits can be in excess of 35% of your operating expenses. This naturally encourages companies to make sure they are getting what they pay for: bottom-line results through superior performance (the assumption being that the correct drivers of performance and behaviour are being addressed).
This then leads us to look at the link between intrinsic and extrinsic motivators and rewards. If every employees is totally driven by the money he gets, things might be simple. However, over the period of a career, our desires, wants and motivation change. Yes, expenses increase as family and health (and lifestyle) demands grow, but there also comes a time when we yearn for fulfilment.
Let’s put this another way: if i am totally driven by my internal motivators, for how long will i be able to sustain myself without external appreciation (in the form of pay and recognition)? Perhaps only artists, ascetics and selfless social workers are driven by such lofty ideals. The rest of us, unfortunately, need cash. Alternately, if you pay me but don’t appreciate me (shower praise, stoke my ego), then my emotional needs will not be met. As we like to say: ”Everyone needs appreciation.”
So organisations develop complex, integrated reward and recognition programs that balance present cash, future cash (retirement benefits), fringe benefits, incentives, appreciation and what not. Incentives are linked to performance (individual and business) and can even take the form of stock options. The million dollar question that ensues: Do any of these ensure the desired outcomes?
Our needs as employees evolve and so do market partices. This means a constant tweaking or upgrading of the system. The Employees Value Proposition looks to go beyond these basic essentials and provide a more holistic experience. At the end of the day, all these elements are a cost to the company – whether the employees sees (and appreciates) them or not. So they need to spend wisely. Analyse and decide what motivates you.
By Leon Menezes. The writer is a professor-of-practice at the IBA-Karachi, a senior HR practitioner and an executive coach.