Just finished reading Daniel Pink's latest book, "Drive," about motivation. He argues that the standard carrot and stick motivators, including pay, are not the most effective ways to motivate workers. That is, of course, as he says, assuming that compensation is internally and externally fair. More attractive motivators are gratitude and an opportunity to master something.
His argument is attractive in a downturn since it requires less cash. Indeed, according to Mercer, a human resources consulting company, some of non-cash compensation tools, also known as "total rewards," became popular. These include work-family initiatives and time-off plans.
But the attractiveness of those ideas seem to fading, according to Mercer's spring survey of 320 employers. As, or maybe we should say, if, the economy improves, more and more employers are worried about voluntary turnover, that is people leaving for better opportunities elsewhere. And those opportunities may exist, according to the survey. One in four companies plans to expand, and half of those jobs will be external hires, the survey shows.
That's why, according to Mercer's survey, companies are again beginning to look at increases in base pay and increased use of variable pay (meaning bonuses). Career development is a third popular component.
"Non-cash programs like career pathing, increased communication to employees and work-life initiatives are important in fostering employee retention and engagement regardless of the economic environment," said Loree Griffith, who works in Mercer's compensation program. "However, as recovery occurs, employers want to revisit pay as a means of staying competitive and retaining top-performing employees."
This makes sense. Families have been hunkering down. Even those who remained employed may have had a spouse who lost work with the accompanying drain on family finances. If the layoff fear factor diminishes, replenishing family coffers will take on a new importance. And if companies begin lifting pay, competition will require matching behavior from other firms to speak to the issue of external fairness. Again, assuming appropriate fairness, it would be a shame to lose track of the other important motivators, motivators that are more personal, and also extremely effective, according to so much of the literature on this topic.