Reward Program Myths
Forced ranking motivates employees
There are fundamental flaws with this practice of selecting a fixed percentage of the organization to slot into the lowest performance bracket. These flaws include an assumption that there is a large group of underperforming employees for whom management has neglected to address their poor performance. Additionally, it’s a misconception that by informing employees that they are in the lowest bracket, those employees will be spontaneously motivated to perform better.
Managers motivate employees
Did it feel better to see that gold star on your elementary school assignment that you worked so hard on or show it to your other when you got home? Or, more precisely were you intrinsically motivated by your hard work or extrinsically by your mother’s approval? As Daniel Pink suggests the enlightened knowledge industry workforce is motivated by the mastery of our professional pursuits or intrinsic motivation. Management should be careful not to impede employee performance by spending their time sprinkling affirmations instead of staying out of their way.
Employees are more likely to recall the percentage of their last increase rather than the absolute amount of pay they receive on annual basis. Once a certain comfortable income level is achieved, employees focus on the intrinsic reward of the job. This is evidenced by the fact that companies like Google, who are full of people who are wealthy beyond their wildest dreams, continue to go to work. Management is smarter than employeesHave you noticed on reality TV shows that as soon as one person thinks they are in control, they are summarily voted off? Those who are not humbled by the honor of leading others are doomed by the wisdom of the masses. Employees either think that they individually or truly as a group can make better decisions than a single isolated manager.
You only hire top talent
Many technology companies contend that they hire the “smartest” people. When you think about it, this really is a silly claim that the employees at one company have a higher intelligence quotient than another. A successful hire is as much about finding the right fit of competencies and culture as it is about the claim of above average intelligence.
Savings plan retain employees
Savings plan as well as other employee benefits fill out a basic slate of standard offerings. Companies need to meet a basic competitive offering to appear as if they are a “good” employer. The value and significance of these plans vary greatly based on the individual employee’s situation. HR should be careful not to oversell the importance.
Long term stock appreciation builds wealth
Very long-term stock appreciation builds wealth. However, there have been several periods, such as the late 1980s and around 2009, where a highly volatile stock market made it difficult for medium-term investors to see positive returns. Human Resources, who are egged on by savings plan investment companies, should be careful to give employees credible advice.
Employees value health benefits
Like savings plan, most employee benefits are not a differentiator, and rather a minimum threshold in the employment value proposition. Young employees do not expect to use their health benefits in the foreseeable future. They do however value knowing that they had choice about the kinds of coverage offered and confidence that they’ve made the right decision. Perks motivate employees Three meals a day, on-site discounted gas station, and unlimited vacation are provocative and stimulating conversation points in the recruiting process. However, employees reallyshouldn’t be swayed by perks when deciding to change jobs. Moreover, perks are not a reason to work harder, perks provided to the broad employee base quickly become entitlements. Moreover, an advertent or planned removal simply becomes a potential demotivator. Perks like named parking spaces, lead to resentment and elitism instead of motivation for advancement.
Compensation is fair
While the employment markets and HR compensation practices create a very strong central tendency in pay at all levels, anomalies exist for a variety of situations. The Google software engineer is just as good as the engineer at the next soon to be successful startup, but their actual earnings are completely different. The only way to have the perception of fairness is to be transparent about the process for decision making.
Compensation is less of a motivator than a potential demotivator. Impulsive decisions regarding compensation programs lead to poorly communicated, inconsistently managed and ineffective rewards. The result is that what appears to be rational and beneficial is subverted by inauthentic double speak. Especially for millennials who have become jaded by media and the debunking of many “truths” about our work lives. The lesson to be drawn from these is, to not become too excited or over rotate on any one form of compensation or rewards program. Provide the fundamental structure, and then arm management with the tools and resources to have authentic interactions with their employees.