Make compensation a key motivational driver

The current economic climate and budgetary pressures are driving many businesses to rethink their compensation practices. A 2009 study conducted jointly by the HayGroup consulting firm and WorldatWork association reveals that companies today are principally concerned about how to keep their employees motivated despite budgetary restrictions and uncertainty around continued employment. This is no small challenge. So how can you offer compensation that will attract and retain employees while keeping your costs under control?

The fact that many companies view compensation from a very narrow perspective makes this challenge all the greater. For many, employee compensation is perceived as limited to financial compensation and concretely quantifiable fringe benefits. The reality is much more complex, however. The list of the world’s most admired companies published annually by Fortune magazine testifies to this fact. Year after year, the most attractive companies are actually observed to pay their workforce 5 percent less, on average, than the market level. Yet, this does not prevent employees from feeling satisfied with the way their performance is rewarded! So what’s the secret? These companies know how to capitalize upon different recognition drivers, and, in particular, offer their employees many development opportunities.

The experts emphasize that top performers in this domain are the companies that do not consider compensation as a mere cost item, but as an investment to optimize performance. Consequently, the focus is no longer on tracking a few key indicators or reacting to market trends or employee demands. Instead, the point is to define a real strategy to select and implement the best practices for rewarding and stimulating organizational performance over time.