Many organisations talk about total reward strategies, but in reality, they focus purely on extrinsic motivational factors such as financial rewards to motivate and compensate their staff. While this may be effective to attract talent initially, it may not be adequate to retain key talent or motivate employees in difficult economic situations.
The current Covid-19 (Coronavirus) pandemic is a case in point. Many organisations introduced furlough schemes as a cost-saving mechanism and to limit the number of retentions. As businesses recover, many employees are returning to work full-time but may not feel as motivated as before, finding themselves working in very different circumstances. What can organisations do to structure their reward packages in a way that help both organisation and employees?
A holistic reward approach is required to ensure employee satisfaction and optimal employee performance. Organisations must pay attention to a mix of motivational factors such as extrinsic financial, extrinsic non-financial, and intrinsic-psychological factors.
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Pay will always remain a key reward component, but it alone will not ensure a happy workforce. In challenging economic times, reward factors such as extrinsic non-financial rewards and intrinsic psychological rewards become increasingly important. In terms of non-financial rewards, strategies that can motivate employees are creating a conducive organisational culture that promotes good relationships between managers and their employees, providing sufficient and challenging learning and developing opportunities, encouraging and enabling work-life balance, and open communication practices.
Regarding intrinsic-psychological rewards, research has shown that how work tasks are designed, can be hugely rewarding. Creating an atmosphere of trust, allowing work autonomy, creativity, encouraging job crafting strategies to derive meaning from one’s work, contribute to feelings of significance and appreciation, which in return offer rewards to employees that are often perceived as more valuable than just pure financial rewards.
Crystal Hoole is an associate professor and deputy head of the industrial psychology and people management department at the University of Johannesburg