Victoria Furness asks if benefits can help to boost engagement and how to achieve the best results
Linda Evangelista may once have famously proclaimed that she and the other supermodels, “don’t get out of bed for less than $10,000 a day”, but for many, such high wages would be their primary motivation for turning up to work.
It’s no secret that pay has a significant influence on an employee’s willingness to do a job, but the extent to which reward can be used to engage staff is altogether more complex.
Some of the top drivers for attraction, retention and engagement are competitive base pay, excellent career advancement opportunities and senior management who are interested in employee wellbeing. So while salary is important, its long-term impact is perhaps less significant compared with the training opportunities and management styles used by an organisation.
Jim Crawley, head of reward at Towers Perrin, explains: “If you go back to [motivation theorist Frederick] Herzberg’s idea that there are motivational and hygiene factors, essentially reward and benefits are hygiene factors. So if they are not present, it will make you unhappy but even if you have a high level they don’t necessarily make you more engaged. Having said that, there is a relationship, and the things that drive the link between engagement and reward are feeling fairly compensated or fairly rewarded in relation to the contribution you make to an organisation [for example].”
However, Patrick Gilbert, a principal at Mercer, believes pay is a driver of motivation and engagement, particularly in developing markets, such as China; and where the long-term direction of an organisation is uncertain. “There’s a strong psychological loading associated with pay. There’s a closer link between pay and performance, whereas benefits are often statutory or consistent across different employee groups,” he says.
That said, much of what drives engagement is linked to an employee’s working conditions, work-life balance and training opportunities, which many benefits target. According to How engaged are British employees? published by the Chartered Institute of Personnel and Development (CIPD) in 2006, employees who are satisfied with their work-life balance and those who are on flexible working contracts are more engaged with their work than those who are dissatisfied or not able to work flexibly. Matt Waller, chief executive officer of Benefex, says: “If you give people flexibility or the ability to fit work around their life, it generates loyalty and positive thinking from certain employees.”
Benefits that promote learning and development can also motivate and engage employees. The link between training and engagement levels is backed up by Towers Perrin’s Global workforce study, published in 2007, which found that 78% of employees look for opportunities to develop new knowledge or skills, while 83% enjoy challenging work that will allow them to learn new skills.
Cary Cooper, professor of organisational psychology and health at Lancaster University Management School, is particularly impressed by McDonald’s and its family contract, which lets staff take time off work to attend college and nominate another family member to work in their place. “It shows a level of engagement with their employees as it is responsive to their needs,” he says.
Another employer that is often cited as achieving high employee engagement levels is the John Lewis Partnership. Many in the industry cite its organisational structure, which lets employees become partners in the company, as a significant motivating factor.
Employee share schemes work on a similar principle by allowing staff to take a stake in the company they work for. Dr Ike-Elechi Ogba, senior lecturer at Newcastle Business School at Northumbria University, says: “By giving employees shares in the organisation, what you are saying is ‘you are a part owner of this company and you have to take responsibility for the ownership of this company’.”
Having this kind of input can be extremely engaging for many employees.
But sometimes it is the aspects of reward that aren’t part of a formal benefits or pay structure, which make employees feel most engaged. Royal Bank of Scotland (RBS), for example, operates a system which enables managers to spontaneously reward staff that go the extra mile. Sheila Sheldon, director of European operations at gift specialist Michael C Fina, says: “You might be paid for what you do but if you work for a boss [who] is negative you will begin to wonder why you’re doing your job and start to become dissatisfied.”
Some employees, particularly those working in the public or voluntary sector, meanwhile, are driven and engaged by the deeper connection they feel with their organisation due to the type of work undertaken. Towers Perrin’s aforementioned survey found that in the UK, an organisation’s reputation for social responsibility is the fifth most popular driver of employee engagement. This suggests employers should also consider how their benefits package can be aligned with their organisation’s corporate social responsibility objectives to engage and motivate staff more effectively.
But ultimately what engages one employee won’t engage another. Stuart Duff, a partner at business psychologists Pearn Kandola, says: “Often organisations talk about their entire workforce and how to engage staff, but engagement relates as much to an individual’s personality as it does to the collective values of the workforce.”
This is where flexible benefits schemes come into their own by letting staff select their perks. When it comes to engagement, employers should therefore ensure their strategy not only focuses on reward, but also includes other aspects that motivate staff.
Case study: Camelot aligns reward with company values
Camelot aligns its reward package with company values to boost engagement levels.
Steve Thompson, HR director, says: “From day one, it is critical that employees are engaged with our vision [of] serving the nation’s dream, and understand they’re part of our overall purpose, which is raising money for good causes. There are a raft of good practice benefits in place [but] some of the more emotional things we do that engage people with the [organisational] big picture are more important.”†
Camelot runs a volunteer programme for staff, which lets them work on community team initiatives.
It also takes steps to ensure staff are listened to. Both Camelot’s chief executive and its HR director always attend the staff consultative forum, while its directors host monthly informal question and answer sessions. These are run alongside more formal mechanisms for canvassing staff opinion, such as an annual survey.
Thompson believes it is important people feel appreciated for what they do, so the company has a recognition scheme that lets managers thank staff with online points they can spend on anything from a weekend break to shopping vouchers. It also offers flexible working opportunities and a wellbeing programme.
Case study: Flight Centre’s engagement plan climbs high
Flight Centre promotes engagement using team activities and recognition.
Fleur Stafford, employee engagement and development manager, explains: “It’s important to us that our employees are engaged, that they think Flight Centre is a great place to work, will recommend us to their friends [as an employer] and recommend that people use our company to book travel.”†
The company has surveyed the attitudes of its 540 employees since June 2006 and holds focus groups for staff to discuss the survey’s results and suggest improvements to the working environment. “From these meetings, we [have] introduced our discounted medical scheme, childcare vouchers and now we are implementing a cycle-to-work scheme,” adds Stafford.
There is also an emphasis on learning and recognition, with every employee being issued with a personal development plan. Monthly ‘buzz nights’ are also held to celebrate people who have done a good job. “Not just top performers, but people who are engaged as well,” says Stafford.