As I start to write, I'm humming the Beatles tune of a similar title in my head. Their lyrics were  poetic and prophetic, even when it comes to matters of the heart at work, because money can't buy workplace love.

That's not to say that many a manager and employer haven't tried to use money to counter other deficiencies in treating/managing/leading/recognizing/rewarding their workforces, but it rarely works as intended. In today's world of commonplace mass layoffs, "doing more with less" and "working smarter, not harder" a few extra bucks isn't going to buy a Whole Lotta Love (I'm starting to hear another classic coming on..., but I digress).

Don't get me wrong; people work for money, and so market competitiveness, especially for base pay, is critical to the ubiquitous "attract, motivate and retain" objective we often hear mentioned. (Base pay is mostly for the "attract" part, and to a slightly lesser degree the "retain" element; not so much for the "motivate" part, but that's a post for another day). Because cash compensation is so important, it's critical to make sure the cash elements of your rewards programs are competitive with the relevant external labor markets in which you compete for talent.

But if you think you can buy workplace love, engagement, loyalty, or commitment, you're mostly dead wrong. Some people can be bought psychologically, but not that many (excluding politicians, of course!).

Substantial research confirms the disconnect between money and commitment or engagement at work. For instance, a recent study conducted by WorldatWork (membership may be required to view study results), in collaboration with the  Hay Group and others, confirms that indeed, non-pay elements of the total work experience are the key drivers of employee commitment and engagement.

The study, a survey of hundreds of compensation/rewards professionals, reports that organizations realized better outcomes in their efforts to "engage" employees if non-HR employees were also involved in the development of reward and engagement efforts.  Regarding key reward elements, "non-financial rewards, as opposed to financial rewards, are viewed as having more impact on employee engagement," says Tom McMullen of the Hay Group.  He goes onto say that "quality of work, career development, organizational climate, and work-life balance have a greater perceived impact on employee engagement than financial rewards." 

The perceived quality of managers and top leaders are also more important than financial rewards on impacting engagement.  "Quality of leadership has a profound impact on employee engagement and motivation" says Paul Rowson of WorldatWork, who also says that "organizations must think it terms of total rewards and not just financial rewards if they are to enhance employee involvement, commitment, job satisfaction - and performance."

Assuming your compensation levels are already competitive, the next time a weak manager seeks approval to use increased pay to enhance retention or morale, maybe we should be thinking about fixing the manager, rather than throwing money down the drain of worker discontent, especially with their management and/or leadership.

You may have heard the phrase that employees join companies, but they leave their managers - this is so true (just think about the last really bad manager you worked for).  Of course, some will leave for more money or opportunity elsewhere, for sure, but when people are poorly treated and/or managed, virtually all of them want to leave!

Once your workforce is paid fully competitively, additional reward dollars would be better spent on programs and actions that enhance culture, employee commitment and engagement, and ones that strengthen your management and leadership.

Don't try to buy employee love and loyalty; earn it instead.  It's cheaper, and more effective.

Doug Sayed is principal and founder of Applied HR Strategies, Inc., a Seattle-based compensation consultancy, and developer of the StrategicPay Series, a series of hands on, "do it yourself" guides for developing your own strategic compensation programs.

Is it crucial to maintain a competitive pay posture to attract and retain high quality talent?  We think so (that why we spent over a year writing a book about how to do it!), and most HR and rewards professionals believe that as well.  But does paying competitively make your people happy, engaged and/or driven to perform?  Generally not, unless you're using a well-designed incentive program to drive certain behaviors (but that only addressees the behavior component).

Competitive base pay is absolutely critical to attract talent, and to maintain a basic level of satisfaction with the compensation that employees receive for voluntarily sharing their skills with your organization.  Beyond base pay though, what really drives motivation, worker engagement and the desire to stay with an organization are how you manage and treat them.

See the table below and tell me what you think of the difference is between an employee who is willing to stay with your organization because they are basically satisfied (but not terribly engaged) vs. an employee who really wants to stay with your organization and believes in it (i.e. is engaged).

Source: Employee Hold'em, 2009

The data above is from a large study done every two years or so by by an organization that focuses on employee engagement, and the results are clear: it's not just about the money!  In fact, we would argue that how you manage and treat your employees is more important than the money, assuming the money is about where it should be (you're paying at least close to or better than competitively).

With dollars scare these days (over 50% of employers gave 0% - or less - pay increases last year, and 2010 pay increase budgets are south of 3% for now), how you treat your employees is even more critical.  Hence, there is a growing movement towards more qualitative rewards (feedback/communication, appreciation, training, etc.) , as opposed to just quantitative ones (mostly pay and benefits)

We'll continue to bring you more information and data on this large topic of worker psychology, qualitative rewards and employee engagement in the coming months.

Don't miss an opportunity to sign up and participate in these upcoming events:

Compensation, Rewards & Employee Engagement Trends - 2010 and Beyond (approved for 3.5 HRCI Credits)
Date: May 13th, 2010 8:00 AM to noon
Location: Bellevue Harbor Club
Cost: $295.00
Register for this Event

Organizations are struggling to keep up with changes in salary and compensation trends. As the economy recovers, what is the future of pay and employment? What can employers do to retain and re-engage talented employees? In this half-day session, participants will explore 1) the latest compensation trends and future rewards thinking and 2) the elements of a successful employee engagement and recognition strategy. Participants will take away low-cost tools, ideas and resources to build a culture of appreciation within their teams and organizations. Workshop instructors include StrategicPay Series creator, Doug Sayed and Chief Motivation Officer, Theresa Chambers of Recognition Works. The program will be held at the Harbor Club in Bellevue from 8am to noon. The program includes a continental breakfast, parking validation, as well as a discount coupon to purchase the Base Pay Toolkit worth one-half the tuition cost alone, if interested.

 
Utilizing Market Data & Conducting a Competitive Pay Analysis (approved for 3.5 HRCI Credits)
Date: June 10th, 2010 8:00 AM to noon
Location: Bellevue Harbor Club
Cost: $295.00
Register for this Event

This half-day program will focus on how to conduct a market-based pay analysis, including selecting and using pay data sources, grading jobs into a salary structure and evaluating how the company measures up.  This is an advanced, in-depth course.  Participants will walk away with a working knowledge of the subject matter, as well as the tools and templates to execute in their company.  The cost includes a continental breakfast and parking validation, as well as a discount coupon to purchase the Base Pay Toolkit worth one-half the tuition cost alone.

The StrategicPay Series authors and selected expert guest presenters are offering several intensive half-day workshops for HR and compensation professionals/managers. For certified professionals, HRCI credit is pending for the upcoming events.

The cost of each session is $295, but there is a $50 discount (per session!) for those signing up for two or more. In addition, participants receive a coupon code for 20% off on the purchase of the Base Pay Toolkit, worth half cost of attending alone!

Compensation, Rewards & Employee Engagement Trends - 2010 and Beyond

With Doug Sayed, and Theresa Chambers of Recognition Works

Note: approved for 3.5 hours of HRCI credits!

Date: May 13th, 2010 8:00 AM
Location: Bellevue Harbor Club
Cost: $295.00

Register for this Event

Organizations are struggling to keep up with changes in salary and compensation trends. As the economy recovers, what is the future of pay and employment? What can employers do to retain and re-engage talented employees? In this half-day session, participants will explore 1) the latest compensation trends and future rewards thinking and 2) the elements of a successful employee engagement and recognition strategy. Participants will take away low-cost tools, ideas and resources to build a culture of appreciation within their teams and organizations. Workshop instructors include StrategicPay Series creator, Doug Sayed and Chief Motivation Officer, Theresa Chambers of Recognition Works. The program will be held at the Harbor Club in Bellevue from 8am to noon. The program includes a continental breakfast, parking validation, as well as a discount coupon to purchase the Base Pay Toolkit worth one-half the tuition cost alone.


Utilizing Market Data & Conducting a Competitive Pay Analysis

Note: approved for 3.5 hours of HRCI credits!
Date: June 10th, 2010  8:00 AM
Location: Bellevue Harbor Club
Cost: $295.00

Register for this Event

This half-day program will focus on how to conduct a market-based pay analysis, including selecting and using pay data sources, grading jobs into a salary structure and evaluating how the company measures up.  This is an advanced, in-depth course.  Participants will walk away with a working knowledge of the subject matter, as well as
the tools and templates to execute in their company.  The cost includes a continental breakfast and parking validation, as well as a discount coupon to purchase the Base Pay Toolkit worth one-half the tuition cost alone.
 

Compensation Trends & Salary Planning

Note: HRCI credits anticipated. We will apply for them as the date gets closer
Date: September 23rd, 2010 08:00 AM
Location: Bellevue Harbor Club
Cost: $295.00

Register for this Event

This program will provide an update on current market trends, including merit increase budgets, salary structure movement, etc., and instruction on salary planning, budgeting and merit plan design.  Participants will walk away with a good picture of the current market conditions and several ideas for merit plan design, as well as the tools and templates to develop, model and implement in their companies.  The cost includes a continental breakfast and parking validation, as well as a discount coupon to purchase the Base Pay Toolkit worth one-half the tuition cost alone.

This post is from derived from my recent post at the Compensation Cafe.

After more than two decades of slow but steady erosion and a few body blows in the recent recession, the state of job satisfaction, and more importantly the state of the overall employee-employer relationship, are at new generational lows. Employee morale is in the tank, and the willingness of workers to bolt at the next opportunity is at a multi-year high. Numerous studies have shown these trends, including the recent Conference Board report, which confirmed the multi-decade low in job satisfaction.

The 2008-2009 recession was a real punch in the gut to an already injured relationship between employers and their most "valuable" asset (at least that's what a lot of annual reports say). Between the massive layoffs, skimpy or non-existent pay increases (or outright pay cuts), and with the on-going push for "doing more with less," the foundation of the employee-employer relationship has weakened considerably over the years and is in need of some serious shoring up.

Some HR and compensation professionals have told me they think "engagement" is an overused buzzword. Even you may believe this, but just think about your typical "dis-engaged" employee and ask yourself how much value they bring to your organization?  Buzzword or not, having employees who are actively engaged in their work and believers in their organization and leadership is absolutely critical to organizational performance and maintaining a psychologically-healthy workplace, where people tend to thrive and stay.

So, what's an employer to do? How can we enhance this somewhat nebulous "engagement" concept?  If you're looking for simple/easy, "plug-and-play" solutions, they don't really exist, but here are several areas that merit your consideration:

• Increased/enhanced communication: nearly every broad-based or organizational study I've seen has shown a desire on employees' part for more communication, about their organization and their goals, and especially about their job expectations and performance. Communication takes some time and effort, but it's virtually free to provide it, so why do so many organizations fail in this key element of management and leadership?
• Increased transparency: who doesn't want to know how and why they are paid what they are? The more open you can be about your compensation philosophy/strategy, and how as an organization you're meeting the goals of your compensation program, the better off you'll be in the minds of your employees. Transparency fosters trust, while a lack of it may foster distrust.  If you have a soundly-built and competitive rewards program, what's to hide? Share the truth! I am not suggesting total transparency or gritty behind-the-scenes details, but if you've got a program you can be proud of, share it, and how your organization's' approach is a win-win for the organization and its employees.
• Recognition: recognition is the missing link in many rewards programs, and a failing of most management teams.  Can you catch your employees performing highly, going above and beyond, or notice those who provide great customer service on a regular basis? Are you ready and willing to provide genuine appreciation and recognition for/to your most valuable asset?  Recognition, a corollary of communication, is inexpensive to deliver, but can provide great psychological benefits for your workforce, and eventually to those who practice it genuinely.
• Listen, trust and empower: this may not come easy for some managers, but managers who can learn to listen better, trust in their staff, and delegate more responsibility and authority (and with the resources/tools to handle it) will find that most employees respond quite favorably to this approach. While some staff want to be led by the hand, most workers want to be heard, to have input into their work, and have the trust, resources and authority to get it done.
• Develop thy managers: Have you ever heard the phrase that people don't leave their jobs, they leave their manager (or company leadership)? Well, in most cases it's true. People tend not to leave managers and companies they respect and like working for, but they do tend to leave ones they don't believe in. Thus, it's critical that companies train and develop their management teams, as well as reward their best people managers, while dealing with the ones who aren't (see next point).
• Get your management performance act together: organizations that don't address performance issues within their management/leadership teams are destined to have morale and dis-engagement issues within their non-management ranks. Working for a poor manager makes your work life suck, is the single biggest contributor to turnover and poor morale, and is a guaranteed "engagement killer."
• Cash compensation: let's not forget that most folks are to at work trying to make a living for themselves and their families. But notice, it's nowhere near the top of my list. Dollars are very important, but you can't buy workplace love. If you were one of the many employers that engaged in wage cutting and other forms of pay-related retrenchment during the recession, then the first thing you should be thinking about is getting at least back to where you were prior to those cuts.  After that, it's time to start thinking (or re-thinking) about competitiveness with the external market for your talent. Paying competitively won't guarantee you anything, but it should reduce pay-related turnover, and enhance your ability to attract and keep talent. Don't believe that just because the labor market is a mess right now that it renders this topic as unimportant. Staying competitive always important, as there is always a market for top talent.  Several studies have shown that a high percentage (over 50%) of the workforce is ready to move onto the next opportunity when it presents itself, so don't help push them out the door by ignoring this critical aspect of the "employment deal."
• Developmental opportunities for professionals: when times get tough, training and development budgets are usually one of the first things to be cut. If that's the case at your organization, you should help to make it one of the first things to be restored. Beyond being appreciated, communicated with and paid fairly, the opportunity to learn, grow and develop is high on many people's importance list. A lack of growth and learning opportunities is a significant competitive disadvantage for any employer, but especially in the so-called "knowledge" industries (technology, scientific, engineering-related, etc.) where ongoing education and learning form the collective knowledge backbone of the organization.

Well, that's my list.  I'd like to hear your thoughts too.  Go forth and actively nurture satisfied, motivated and engaged workers!

Doug Sayed is principal at Applied HR Strategies, a Seattle area compensation consultancy and lead author of the StrategicPay Series Base Pay Toolkit, a hands-on, "do-it-yourself" (DIY) guide to developing a strategic market-based compensation program, complete with dozens of pre-built tools and templates, ready for use.

2009 was a real wake up call for just about everyone, and it was one for a lot of HR and rewards professionals too.  The merit pay budget cuts (or eliminations and/or actual pay reductions), mass layoffs, rising fear and plummeting morale rocked the employee-employer relationship to its core.

But wake up calls can be a good thing too.  Right out of college, between undergraduate and graduate school, I was a crisis counselor at a mental health center emergency services unit. I learned a lot about life there, and one of the many lessons I took away was that sometimes you have to hit rock-bottom before, before you can start climbing back up (2009 was rock bottom, let's hope).

If you're an HR or rewards pro responsible for dealing with issues like employee relations, organizational change efforts, and "motivating the troops," than maybe 2009 should have been your wake up call.  After the the past 18 months of budget cutting, layoffs and other forms of retrenchment, the foundation of the employee-employer relationship is looking a bit shaky and in need of reinforcement and/or rebuilding.

Shoring up employee engagement (or re-engagement) or should become a clarion call for us in the "people" business.  So will addressing the issue of employee retention, as numerous studies have shown that a large slice of the labor force is ready to bolt for greener pastures when the opportunity presents itself.  It's quite likely that engagement will become the "new" retention, as happy and engaged employers tend not to bolt for the proverbial greener pastures, because they already feel pretty good about the pasture they're already in.

Many compensation professionals will say that restoring the 2009 take-ways, and addressing competitive pay gaps are key for employee retention. And while I can't disagree with this conceptually, since dollars do matter, I believe the issues needing attention go far deeper than just dollars alone. 

It's about addressing the relationships we have with our people and restoring (or building from the ground up) a sense of belonging, a sense of appreciation and recognition; and a true valuing of the workforce that has come under a silent (but morale-crushing) attack in recent years, even if its been totally unintentional.

I saw a good post last month about workplace trends and issues for 2010 by the Herman Group, and thought it's a good (and brief) read on some of the issues being discussed here.

Over the next couple of months, I'll try and address some of these issues in more detail. 

Until then, I hope your 2010 is off to a great start!