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Salary and Benefits are NOT Engagement Tools

systematicHR Avatar

So you’re thinking about getting married.  You go out and buy a ring with a diamond in it, you figure out a romantic place to ask, and then you get down on one knee and pop the question.  Somehow, she says “yes.”  They key is that there are probably a large number of reasons she is willing to get married to you, but one of them is not the fact that you presented her with a ring.  The ring is one of those compulsory things that you just kind of have to have, but it was not the deal clincher.

Similarly, salary and benefits are not engagement tools.  The reason for this is that they are not differentiators.  Everyone offers competitive salaries, and anywhere you go, the salaries will be within 10% of each other for similar geographies, similar skills and similar work.  The same goes for benefits.  The 401(k) and the health benefits can be better or worse, but probably are not factors for employees sticking around.  Every employer is going to offer some form of benefits, and while the cost of benefits can vary greatly here, the value of these benefits is relatively lower now that most families have 2 income earners and so long as one of the partners has good benefits, the other can go wherever they want.

I write this as I read FoT’s post on the “anchors” that cause people to stay at your organization.  It focuses primarily on salary and benefits.  While I don’t argue that these are contributors, I think we have all know for years that salary and benefits are really just a commodity in the engagement equation.  So long as they are competitive with the rest of the employer market, salary and benefits don’t differentiate your organization at all.

From a talent management perspective, I now ask a similar question – “What would happen if the government eliminated the anchors that ‘most’ employees perceive as the reason they work for a firm?”

Those anchors in my mind are – health insurance, retirement, income and stability.  After those basic needs come the more esoteric, but important, elements of feeling recognized, feeling in control, feeling connected, etc.  I say importance – but the right word might be “fear” – employees do some things for survival and fear before they worry about engagement.  ((Herbert, Paul, December 22, 2009.  “Answering Why Should People Want to Work at Your Company. Anchors Aweigh!”  Retrieved from on December 24, 2009.))

Employee’s decide what company to join based on opportunity, salary, and benefits.  However, they stay for how much they love their jobs, if they are doing good work, if they like their peers, and appreciate their direct managers.  Salary and benefits has not been part of the employee engagement equation for ages.  IMHO.

systematicHR Avatar

5 responses to “Salary and Benefits are NOT Engagement Tools”

  1. Joe Brown Avatar

    While I generally agree with your premise, I believe that there are ongoing aspects of compensation, beyond the initially negotiated salary level, that are essential to “engagement”, and that these needs should be a central focus of certain key HR processes.

    Specifically, in my experience, many employees want to know that there are compensation opportunities available to them – both in their current job and in larger roles. The ability to maintain, communicate, and manifest these opportunities are among the values of effective compensation structures, employee communications, and career development processes.

    Further, those employees want to know that such opportunities are available to them on the basis of objective and equitable assessments of performance, and to understand as specifically as possible the relationship between performance and compensation opportunity. This underscores the importance of an effective and well-integrated performance management process.

    Finally, those employees want to know that the opportunities made available by their present employer will maintain or improve their position relative to the external market. This calls for effective compensation management at both the macro and individual levels.

    In the absence of such opportunities, love of job, doing good work, likable peers, and appreciated managers will not be enough to retain the most capable, effective, and thus valuable employees.

  2. systematicHR Avatar

    Thanks Joe – I completely missed the very significant impact of “talent management”, learning and career growth opportunities in my post. I completely agree with you.

  3. Jan Brockway Avatar

    Completely agree with you. To be an employer of choice, salary and benefits represent table stakes. Staying at an organization, and being engaged with the work there, is much more about having interesting, challenging, exciting work to do while getting clear direction from your manager, feedback that helps you adjust, grow and react to the organization, changes and such.

    But there is a connection to salary for organizations that commit to a pay for performance strategy. These companies must define and communicate the set of rules that drive payouts (e.g., this behavior, this rating = x raise, y bonus, z stock). Do the managers understand the rules? Can they explain them to employees? Are they able to make hard decisions and communicate those decisions related to performance and salary to the employees? Consistently following those rules will motivate better performance. The opportunity for continual feedback helps all employees adjust to organizational changes and grow in their career.

    And, while competitive salary may be table stakes, an effective and well-managed compensation planning process can be a strategic advantage. Stay tuned.

  4. systematicHR Avatar

    Jan. Good point about incentive comp. I think I’ll write a piece about Pay for Performance vs. Pay for Contribution vs. Pay for Potential. 🙂

  5. Mark Cruijff Avatar
    Mark Cruijff

    Good article, and it made we ponder what I find important and what makes me stay at a company.

    Being appreciated, and having room to develop is certainly part of that. But what I miss in the article, and comments above are the following engagement boosters:

    1) to be at a company where clear long term goals are set, that are cut up in achievable, challenging, clear short-term goals (“Goal Setting Theory” Latham & Locke).

    2) to be in a company where their is clear alignment to a common goal, and where people feel that they are able to contribute and contribute to setting this goal and achieving this goal

    3) to be in a company which allows (mainly due to point 1 and 2) for a clear work-life balance.

    If I need to sacrifice too much of my personal life (with three super kids and a beautiful wife that’s not something I want to do) then I’m doing something wrong or the company is doing something wrong. If I feel this will not change at the company then the only choice left is to leave.