Does increased pay lead to increased performance?

Looking ahead to the new year, we predict increasing pressure on employers, large and small, to retain and motivate their top talent. Current statistics indicate as much as 50% of your employees may be “considering” leaving your organization.

The Role of Compensation

While employers naturally turn to pay increases to retain and motivate employees, pay has not been successfully proven to increase employee engagement, an ingredient verified to improve profitability and customer satisfaction. In fact, pay often becomes an entitlement and loses its meaning as a reward for efforts. Pay has, however, been linked to the creation of employee dissatisfaction, when pay is perceived as not aligned with the efforts contributed.

Increasing the Odds of Achieving High Engagement

To achieve a highly engaged workforce, employees must want their organization to succeed and feel connected to your organization’s mission and purpose. Some studies suggest that as few as a quarter of your workforce fall into this category. The good news is that about half of your workforce might be sitting on the fence in the middle of high and low engagement. There are some proven methods (that do not rely on increasing employee compensation) for moving those employees off the fence to become highly engaged.

Participative work environments make a difference. In a participative work environment leaders are respected and achieve followership with ease, employees believe their opinions matter and they are heard, and someone at work has an interest in their success. These kinds of strategies are easily within the control of leaders and come at no additional monetary costs.

When employees have a strong “line-of-sight” to their organization’s mission and purpose and how their work contributes to that, they will direct their efforts to achieving what their employer has laid out for them. Leaders who can bring the organizational mission to life for employees by connecting it to what they do every day can expect improved results.

Finally, a trending workforce requirement revolves around work-life balance. Designing solutions that appeal to both your employees and applicant pool contributes to employee retention and recruitment efforts. These can be in the form of special work assignments, community involvement while on paid time, mentoring opportunities, flexible working hours and so on.

At the end of the day, research has shown that most employees who voluntarily leave their jobs, leave not because of pay, but because they are disenchanted with their boss. Making sure that as leaders we continuously develop our skills and abilities in building a highly engaged workforce pays dividends to the entire organization. It’s also just a lot more fun to be at work when this is happening.