If you are trying to create greater employee engagement within your organization, consider this thought from Alice Zhou in her recent Strategy+Business article: “Emotional energy drives employees to go above and beyond, regardless of external incentives such as compensation and benefits. Specific strengths that are sources of pride within a company feed this emotional energy, which in turn drives people to work harder toward bettering the organization. The sense of pride that comes from this achievement further fuels emotional energy, motivating people to strive for even further success. And so the cycle repeats.”
Ms. Zhou sets up that assertion with this insight:
When we at the Katzenbach Center ask a client’s employees what it is that makes them proud to work there, we often marvel at how consistent the answers are throughout an organization, regardless of level, function, or team. These cultural anchors aren’t always immediately obvious to outsiders, but if you take a bit of time to speak with individuals within an organization, you will begin to uncover them.
Employees at a mission-based hospital network may be driven by the knowledge that their work enables patients to live longer, healthier lives. People working for a blue-chip company may take special pride in being associated with a premium, globally recognized brand. Individuals working at a startup may wear its related scrappiness as a badge of honor. Workers at a factory may relish their part in its paternalistic role as provider — of jobs, economic growth, and tax revenue.
This pride fuels “emotional energy,” something critical to both our understanding of organizational culture and employee engagement. (How to Harness Employees' Emotional Energy, Strategy+Business, February 7, 2018, Alice Zhou)
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So here’s the $64 thousand question: How would you describe the “emotional energy” of your organization?
If you are not sensing growth and performance momentum in your company, it is likely you are also observing that your employees: 1) do not seem to have a sense of purpose; 2) exhibit little passion in their work, and; 3) demonstrate negligible pride in the organization. And here is the kicker—your people are probably also complaining about their pay.
In short, if you are struggling with employee engagement, all of these factors are almost certainly present in your business.
For years, books, articles and research reports have made the claim that compensation plans such as incentives have no real impact on employee performance and, by extension, engagement. And over those same years, we have agreed. But this article, because of the principles it discusses, gives us insight into the place rewards do play in the engagement arena. Because of the other elements that drive employees to unleash their passion and perform at high levels, compensation really becomes a kind of “hygiene” issue—a term a Deloitte 2015 study applied to employees' view of their pay plan. As long as it is “adequate,” it is neither a diminishing or motivating influence in an engagement context. However, if pride, purpose and passion have not taken root in the organization, then pay rises in significance and scrutiny.
Think of it this way--no one gives much heed to pay matters (including employees) unless and until one or more of the following is at play:
- The compensation you are offering is below market standards.
- Your value proposition is at odds with your employee’s view of his or her value.
- The financial rewards you provide are not consistent with the employee’s long-term goals, their role or the performance expectations you have set (or all three).
- The other factors driving “emotional energy” are non-existent and in your employees' view, what you are paying doesn't make it worth staying; or if they do hang around, they aren’t motivated to make a high performance effort.
A Total Rewards Solution
This view of engagement demonstrates why it so critical that compensation be designed, presented and reinforced in a Total Rewards framework. At VisionLink we believe that there are four, interdependent factors that always have to be “working” for employees if they are going to become and remain engaged:
1. A Compelling Future. This element doesn’t just mean your people like where your business is headed and believe it can succeed. That is just a starting point--and a given, if you will. Beyond that, quality employees want to feel good about the purpose the organization is serving. If they do, they consider their contributions to the success of the company as advancing that purpose. This is when a sense of pride sets in and their passion comes to the surface. They also want to feel connected to your values which simply means they are comfortable with the way you are going about the pursuit of your purpose (how people are treated, integrity in leadership, etc.).
But that's not all. For employees to be "compelled," they must be convinced their contribution is essential to the success of the company—in fact, that you are unlikely to achieve your growth goals without it. This is part of what “permits” them to stay committed to their work and sustain a sense of pride—not just in what they are personally accomplishing but in what the organization achieves. And they want to know all of that has meaning beyond just hitting financial targets and passing growth thresholds.
2. A Positive Work Environment. Certainly, employees want to feel safe and comfortable in the workplace. However, beyond that, they want to have a role that is consistent with their unique abilities—and engage with other individuals who are similarly situated. Individuals working together within the realm of their distinct talents gives birth to unique teams. That combined force unleashes a collective passion and creative energy that leads to success. Winning then becomes a contagious expectation which further fuels deep engagement. A culture of confidence results.
3. Personal and Professional Development. Employees sink deep roots in an organization when they are experiencing improvement, both personally and professionally. This occurs when your people feel as though they are getting better because of the resources with which they engage in their role and by virtue of the stewardship you have asked them to assume. Their participation on a unique team is part of this. Superior technology, effective strategic planning, training, mentoring and more—all combine to create an environment where people feel they are set up for success. This combination leads employees to feel a sense of purpose and pride and a willingness to approach their roles with passion.
4. Financial Rewards. Compensation in a total rewards environment is designed to promote a sense of partnership. It should grow out of a clear pay philosophy that articulates how the company defines value creation and with whom it believes it should be shared. This approach encourages employees to assume a stewardship mindset about their roles—taking ownership of the outcomes the company needs them to fulfill. Pay strategies that promote partnership strike the right balance between salaries and incentives—and between short and long-term performance rewards (value sharing).
Hopefully, in this brief description of Total Rewards you get a sense for how this framework creates an environment where employees can easily connect the purposes that matter to them with those of the organization. This alignment allows them to unleash their passion about both their roles and the company because of the pride they feel in what they and their employer are accomplishing together—both now and in the future.
In Total Rewards setting, compensation doesn't become a nagging issue about which business leaders and employees are constantly in conflict. Instead, it is the means of building a unified financial vision for growing the business—one in which all stakeholders benefit from the wealth multiple the company is able to achieve because its workforce is fully engaged.
