With increasing competition for talent, how can companies attract the right employees to their businesses? Once they join, how do they make sure they reward their employees appropriately so they are engaged and motivated in order to retain them in the long run? This is a challenge employers continue to face and with talent being the biggest key to employers’ success, having a clear strategy to recruit, reward and retain your employees is critical.
There are various tools companies can use to reward their employees. The challenge is to find the ones that drive the right behaviours. An effective reward strategy can boost employee productivity, creativity, motivation and overall engagement of employees. There is a great deal of research that illustrates the direct correlation between employee engagement and company profitability. So what are the correct reward mechanisms? Ultimately, reward can be broken down into two main categories: intrinsic rewards and extrinsic rewards. Extrinsic rewards include salary, bonus and benefits. They are external to the job. Intrinsic rewards are the personal satisfaction the employees get from the job such as pride in the work, feelings of accomplishment or being part of a team.
When companies think of a reward strategy there is almost aways an overwhelming focus on extrinsic reward. If there is concern over turnover and engagement of employees what is usually the first response of managers and HR? In our experience it tends to be either a salary increase or a retention plan for some key employees. There may be times when this is the right approach but always reacting in this way can create an adverse culture that impacts negatively on retaining key talent in the long run. Too many organisations are making their decisions on talent and people on assumptions that are out dated and ineffective.
Businesses need to harness a new approach in how they recruit, reward and retain their employees. It’s an approach built by motivating and engaging people, particularly Generation Y employees, because of a desire to do things because they matter, they are interesting and part of something greater. In order to do this, businesses need to focus on two things:
- Putting the emphasis on the intrinsic rewards which gives employees a feeling of achievement and personal growth.
- Ensuring that the right people are recruited into the roles in the first place. This doesn’t just mean the right skills and qualifications but, more importantly, the right values and cultural fit.