Recent cross-sector research from QCG shows that pay in organisations with lower levels of employee engagement is at least 20% higher than it is in organisations that do better on engagement. So, what is this really telling us?
Juan Novoa, Head of Reward at QCG, said:
'Factual and anecdotal evidence clearly suggests that high levels of pay do not necessarily drive engagement. This is not to say that high pay erodes engagement either. What we have found is that pay is often used to make up for shortcomings in other areas of the employee value proposition (EVP) – or at least try to, rather unsuccessfully. And therein lies the challenge, and the opportunity, for HR and reward professionals to re-think their approach and work on the factors that do make a difference for employee engagement.'
He added:
'Granted, pay in organisations needs to be set at a level where it meets employee needs and sense of value. A satisfaction threshold if you will. But the goal should not be to pay more for the sake of it. It should be about paying ‘right’ – and this is where organisations need to depart from the whole ‘pay is a hygiene factor’ concept. The sense of purpose that employees derive from work and their personal drive for money means that this satisfaction threshold varies across organisations. It is not aligned to a particular market percentile but to the weight of pay and broader reward on their EVP. Clarity, consistency and alignment of reward then grow on importance as factors to drive engagement.'
QCG advises organisations to consider reward interventions in the light of their EVP. It encourages practitioners to see reward through the lens of engagement and test their plans against the factors that truly make employees feel passionate, energetic and committed to their work.