By Claudine Kapel
Can compensation programs be used to bolster employee motivation?
This question has been the subject of much debate through the years.
Compensation programs represent a significant expenditure for many organizations. So it makes sense to examine how pay can best be leveraged to influence employee performance.
Periodically, studies and books emerge that suggest pay for performance schemes can be detrimental to organizational performance because they can undermine people’s natural inclination to perform well. The general premise is that rewards, as extrinsic or external motivators, encourage employees to narrow their focus onto just the desired outcomes or results being rewarded. In doing so, rewards can override an employee’s intrinsic or internal motivation.
The latest cautionary voice comes from author Daniel Pink, who also lectures on economic transformation and the new workplace. In his latest book, Drive: The Surprising Truth About What Motivates Us, Pink raises concerns about the potentially detrimental effect of a “carrot and stick” approach to rewards. He contends that such rewards – with their emphasis on “do this to get that” – focus employees on achieving only specified, near-term objectives, to the exclusion of other considerations, including the longer-term health of the organization.
This, in turn, can lead to a variety of negative consequences, including reduced intrinsic motivation, lower performance and diminished creativity. Pink adds that such rewards can also foster short-term thinking and encourage cheating, shortcuts and unethical behaviour as employees look way for ways to “game” the system to gain more rewards.
Pink maintains organizations should place less emphasis on rewards as motivators, and instead focus on nurturing intrinsic employee motivation by fostering work environments that encourage autonomy, mastery and purpose.
While Pink makes some valuable points, it is important to keep in mind that few compensation professionals have ever argued that compensation is the sole or central means for motivating employees. The nature of the work experience itself has long been recognized as a driver of employee engagement and for tapping employees’ intrinsic motivation.
To that end, opportunities for involvement and development have long been considered central to an effective employment proposition – as is the opportunity to do meaningful work or make a difference.
That doesn’t mean that there isn’t also a place for effective compensation programs as part of the overall employment deal. To Pink’s point, compensation can be quite powerful in how it focuses attention.
That’s why it can be helpful to consider compensation programs as communication vehicles, and to be mindful of the messages they send.
Consider your current compensation programs and ask yourself:
- How do these programs express what matters most to the organization?
- Are they sending the right messages, given the organization’s business strategy, values and commitments to customers?
- Are they sending any conflicting messages?
- Do they overemphasize one type of result over others, or do they encourage a balanced focus on a variety of factors that are critical to sustained organizational success?
The aim is to transcend the “carrot and stick” paradigm and to leverage compensation as one more channel for connecting and aligning employees with the vision and purpose of the organization.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.