As the workforce becomes more sophisticated and demanding, what an employee perceives as value in his contract has shifted from just compensation and statutory benefits to overall well-being and recognition in the employees’ work life. A ‘Total Rewards’ approach to creating this value is to combine the five elements of compensation, benefits, work-life, recognition and career development and generate the desired business performance results. Is your company delivering a complete Total Rewards package or are they downplaying some of the components? Especially, employee rewards and recognition?
On a global level, nearly 2 out of 3 companies have a recognition program. Statistics show that the recognition percentage is really low in India and perhaps the reason why less than 30% of employees feel they are engaged!
There is often less resistance to the idea of increasing compensation, raising retention bonuses and increasing training budgets when the attrition is on the rise. But little does one realise that lack of appreciation and recognition causes the most ‘disengagement’ which also happens to be the number one reason for an employee to leave a company! Budgets for an employee rewards and recognition program in India are way below 1% of unburdened payroll whereas the best-in-class benchmark is 1.25-1.5%. This is just one metric of assessment to understand the low employee engagement figures. While Compensation and Career Development seem to get more than their share of attention, the other component of Total Rewards – ‘Recognition’ has still not earned its seat at the table!
This is most likely due to the lack of conviction to shift the weightage one gives to compensation to a more comprehensive approach that includes recognition. This is because it is counter intuitive to normal thinking that believes compensation motivates the most. This mould needs to break. There are enough studies that prove why more compensation is a stressor and why money does not motivate beyond a point.
A study from Dan Ariely’s ‘paperwork experiment’ revealed that money did not motivate employees to perform as much as a simple acknowledgement of their work did. In Dan’s words – “If you are a manager who really wants to demotivate your employees, destroy their work in front of their eyes. Or, if you want to be a little subtler about it, just ignore them and their efforts. On the other hand, if you want to motivate people working with you and for you, it would be useful to pay attention to them, their effort, and the fruits of their labour. And the good news is that it is really easy to acknowledge employee efforts!”
Employee engagement is like a boomerang. You not only get the engagement you deserve, but the performance you deserve too. Meeting employees’ need for acceptance can be driven only through recognition programs.
Total rewards strategy involves the art of combining all the five elements to achieve optimal engagement. As the competition for attracting talent increases, it is more important than ever to make your company show up as an outstanding career break and remember that recognition will play a big role in how you attract and retain top talent.