Should Pay Be a Part of the Employee Engagement Conversion?

Kyla Holcombe, Ph.D., Insights Consultant & Organizational PsychologistEmployee Engagement0 Comments

Do you ask questions about compensation on your employee engagement survey? If so, you may want
to reconsider. Our research (and loads of others’) suggests that compensation is important for recruiting
high quality candidates, securing job offers, and nudging people to pursue promotions (Cable, 2013). Pay
does not, however, drive employee engagement. So if it’s engagement that you’re interested in, it may
be unnecessary to ask about pay on your next engagement survey.

Reconsider Asking About Pay on your Engagement Survey

The topic of compensation often arises when discussing what questions to ask on an employee
engagement survey. For many leaders and HR professionals, it is natural to equate motivation or morale
to perceptions of pay. After all, pay is one way to communicate that an employee is valued. However,
before deciding that pay is an important topic to address in an engagement survey, we encourage
clients to think through the following:

  • What insights about employees’ daily engagement can you gain by asking questions about
    compensation?
  • Are you able or willing to make changes to compensation if you uncover dissatisfaction? If not, it
    may be more harmful to inquire about pay and do nothing in response to employees’ feedback
    than avoid asking the questions in the first place.
  • Why do you expect pay to influence engagement? Is it about being competitive? Fairness and
    transparency? Linking compensation to performance? Pinpointing what about pay may
    influence engagement can inform the types of questions we should ask, i.e., rather than general
    satisfaction with pay. For example, rather than asking about pay levels, you may want to
    understand if employees feel that strong performance is rewarded.
  • Have you recently made changes to compensation programs? If so, it may be appropriate to
    include questions about pay on an engagement survey, but more importantly, also questions
    about perceived fairness, communication, and information sharing.

So why the push-back? What’s wrong with asking about pay on an engagement survey? There is nothing
wrong, per say, about including compensation questions on an engagement survey. However, these
questions may distract from the real drivers of engagement. Pay is an activator – it attracts good
applicants and sweetens job offers to get the best people in the door – but we seldom find that pay
drives employee engagement. Rather than focus on pay on your next engagement survey, consider
going deeper into topics like professional development, supervisor relationships, communication from
leadership, or positive working conditions.

Why We think Pay Influences Engagement

One reason organizations believe that pay is critical for engagement is because employees tell them so.
When asked open-ended questions like, “What would improve your engagement in your daily work?”
employees frequently mention pay. This is not surprising, as most people wouldn’t mind being paid a bit
more. However, employees often fail to understand what really impacts their daily experiences at work.
In fact, employees’ perceptions about pay typically don’t mirror reality; in a study of over 70,000 people,
only about 20% of employees who were actually paid above market value believed they were paid
above market value (35% believed they were paid less; bambooHR, 2017).

Recognition, opportunities to provide feedback, and respect are also ways to convey value for
employees. A more impactful way to demonstrate appreciation and impact engagement is by providing
frequent recognition and feedback, autonomy, and opportunities for learning and growth. These actions
tend to influence engagement more than compensation because they can be experienced daily and can
be done in direct response to performance (vs. opportunities for pay increases, which only happen
periodically). It is our daily interactions and sense of meaningful work that contribute the most to how
we think about our employment.

Reframing the Conversation

If we dig deeper into employee concerns about compensation, especially related to their engagement,
feeling valued is likely at the root. Pay is one way to show value, but it is not the most powerful, or the
one most likely in your control. Before you revamp your compensation structure or put pressure on
managers to find money in the budget, consider other ways to demonstrate value for employees:

  1. Treating employees fairly and having transparency around pay, benefits, rewards, etc. is highly
    important for feeling valued. When there is perceived (or real) disparity, inequity, favoritism, or
    lack of understanding for how decisions are made, employees do not feel valued.
  2. People feel valued when their individual needs are acknowledged and met. Find ways to
    recognize employees in ways that are personally meaningful to them. Inquire about employees’
    goals for the future and strategize ways to support them in the process. Identify specific
    strengths and present opportunities for employees to utilize those strengths.
  3. Find opportunities for employees to develop their skills. Investing in employees demonstrates
    your value for them and also increases their value to the organization. When employees desire
    career advancement opportunities, explain that opportunities come in many forms – formal
    ones like promotions and pay increases, but also informal ones like taking on a leadership role,
    being selected for a training program, or mentoring other employees. Help employees see that
    developing their skills is an important step in career progression, one that prepares them for the
    formal career moves they are striving for.
  4. Coach managers to have conversations about engagement. Managers may be operating under
    the same assumption, that pay leads to engagement, so coach them to probe deeper. Discuss
    different strategies for motivating, recognizing, and rewarding employees. Give managers
    resources and data to share with employees, so they can build understanding about
    compensation and why it’s not the complete solution to feeling engaged at work. Brainstorm
    open-ended questions with managers so they can learn more about employees’ strengths and
    interests, goals, and what makes them feel like valued members of the team.

When you, your managers, and your employees learn to transform a conversation about compensation
into a holistic conversation about value, you can gain the real insights into employee experiences and
engagement at work.

 

References
bambooHR. (2017). Everything you need to know about communicating pay . [eBook]. Retrieved from
https://www.bamboohr.com/resources/

Cable, D. M. (Ed.). The Oxford handbook of recruitment. Oxford University Press.

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