Pay: a new perspective for employee engagement

Pay: a new perspective for employee engagement.

The findings are clear. The top opportunity for driving employee engagement right now is reward.

This is the conclusion from the 2017 Global Employee Engagement study from Aon Hewitt.  It’s based 1,000 organisations globally and over 5 million employees, so the findings are pretty robust.

“Conventional wisdom suggests that engagement has a lot to do with one’s manager and that pay is a hygiene factor not terribly important to one’s engagement. Our findings fly in the face of this” Aon Hewitt

I’ve been championing the cause for robust and transparent pay foundations for many years.  But it feels like it’s time for a fresh perspective if we want to get really serious about driving engagement through pay.

By this I mean thinking about pay from the perspective of the ‘end user’. The employee.   

Firstly, why does pay drive engagement?

It’s not about high pay. It’s about fair pay. Fair pay is all about trust and trust impacts engagement.

My previous blog on the topic talked of how pay is mutually agreed when we join a company.  From then on we usually have to trust our employer to progress our pay in a way that is fair compared to peers, and true to our market worth.

And why is fair pay increasing in importance?

It’s because of the pace of change right now in the world of work is threatening our basic need for fairness and trust.  

“We are seeing tectonic shifts in the external political, social, and technological environment that tap into and potentially threaten employees’ basic needs for fairness, belonging, trust, advancement, and support” Aon Hewitt

Therefore increasing the demand for clarity and transparency on the emotive topic of pay.

And legislation such as gender pay reporting and the impending CEO-worker pay ratios may be a step in the right direction, but they bring new challenges too.  These blunt measures have the potential to shout ‘unfair pay’ unless carefully explained.  

How can we improve perceptions of fair pay?

It goes without saying that we need to put pay foundations in place: the strategy, structures, processes and skills required to make informed and consistent pay decisions.

Sharing all this with employees is good.  But it's about telling employees about how pay is managed as a process.

Perhaps a better perspective is to start with what the employee needs and wants in order to conclude for themselves that pay is fair.

For example:

  • What do employees want?  Old fashioned, paternalistic packages aligned to service and annual processes may not sit well with agile ways of working. For an interesting perspective on participation in pay, take a look at Semler in Brazil.
  • What do they think?  Are you prepared to explore the concerns and ideas about pay from an employee perspective and then have adult to adult conversations about it all?
  • What information do they need? Is it about average pay rates by grade as well as pay ranges?  Or average pay increases for men and women or different ethnic groups as well as the overall pay review budget?
  • What's needed for a 'retail experience'?  What will make everything about pay and reward clear, simple, useful, credible, accessible, engaging and in context? This probably requires personalisation, conversations, and enabling technology.

How will you increase employee engagement by ‘winning over’ your employees on the complex issue of fair pay?  

At Verditer, we make reward more effective. We’re seeing increasing demand from HR professionals to properly grasp and use reward in their roles, so we’re creating some practical reward workshops in 2018. 

Image courtesy of emdot