Our organization pursues a policy of paying employees better than other comparable organizations. Our executive director believes that by positioning ourselves in this way we’ll attract and retain the best people. While our turnover numbers are very low, I don’t see much day to day evidence that high salaries engage people with our enterprise. Are we missing something?

It seems logical, doesn’t it, that employees who know that their employer pays salaries that are well above average would be engaged employees. The truth, however, is that while money can retain (hence the low turnover), it can’t engage. Our reader’s organization has hitched its engagement wagon to the wrong horse.

According to Human Resources Executive Online, a recent Towers Perrin survey reveals that very few companies that have a pay for performance policy reap any increased engagement out of it. This is because organizational rewards aren’t engagers. To understand why, we need to take a step back and distinguish between rewards and recognition.

We’ve been pairing rewards and recognition together for so long that it’s easy to forget that they’re not the same. They are, in fact, very different.

Rewards

Organizational rewards are such things as salary increases, bonuses, promotions, a bigger office, a grander sounding title, more staff. Rewards have the following characteristics:

  1. They are always in short supply. The demand for rewards outstrips the supply.
  2. They are relatively few in number and variety.
  3. You need to access them through policies and procedures.
  4. You need somebody’s approval to give them.
  5. They have short-term efficacy. They feel exhilarating when they’re received, but the effects don’t last.

Getting a reward is like eating a big, delicious meal. You push yourself away from the table saying, “That was delicious, and I’m stuffed. I couldn’t eat another thing.” A few hours later, your head is in the fridge. The meal had only a short-term impact. Rewards are like that.

Employee engagement is the product of the work itself and the environment in which the work is performed. I have a friend who works for a very successful Canadian company. He hates his job. Every once in a while his employer gives him a raise or some stock so that he’ll stay. So he stays. And he still hates his job. He’s retained with money but he’s not engaged. Money isn’t part of the work environment. Once it’s given, it becomes, as it were, a given. It has no impact on how employees relate to the work or the work environment.

Recognition

Workplace recognition can be described as follows:

  1. Recognition comes in many different forms. Every manager has an inexhaustible supply.
  2. You don’t need anybody’s permission to recognize someone’s achievements.
  3. The effects of recognition are long-lasting.
  4. Recognition is free.
  5. Most forms of positive workplace recognition are just riffs on ‘thank you’.

Study after study of what engages employees shows money down toward the bottom of the list. It’s not that people don’t care about pay; it’s that they just want to feel that they’re being paid fairly and competitively, and that they’re not being taken advantage of.

I referred above to positive recognition. There is also, of course, negative recognition. Most negative recognition is given inadvertently; the manager doesn’t intend to deliver a negative message, but that’s what’s received anyway. Here are some examples:

  1. The manager has double-booked a meeting with an employee, and the employee has to reschedule.
  2. During a meeting with an employee the manager looks at e-mails and/or takes a phone call.
  3. Suggestions from employees aren’t followed up.
  4. Useful information is withheld from employees.
  5. The manager is unavailable for days at a time.
  6. The manager doesn’t get around to giving performance feedback.
  7. The manager is a micro-manager.

I can recall a particular moment in my career when my CEO was pleased enough with my performance to be introducing me to members of the board of directors. Now that’s recognition! That same year, I got a performance bonus. If you were to ask me how much it was, I wouldn’t be able to tell you. I’ve forgotten. But I’ll never forget the recognition.

While money isn’t part of the work environment, the manager most certainly is. Employees are constantly tuned in to their managers’ behaviour. When managers recognize achievements, employees know it. Equally, when managers fail to recognize achievements, employees know that, too.

So having a reputation for paying above average salaries may mean you can attract a large pool of candidates, some of whom will be of the calibre you’re looking for. There’s nothing wrong with that. But once a salary has attracted the right person, it becomes just a number. (I have to make an exception here for the capital markets industry. Investment dealers, stock brokers, currency traders, and the like, are strongly motivated by salaries and bonuses. But most of us aren’t working there.)

So let’s start separating rewards from recognition in the workplace. The potential for rewards can help get the right person in the door, what I’ve referred to elsewhere as ‘playing offence’. But it’s recognition (playing defence) that helps to keep employees from leaving.

To submit a question for a future column, or to comment on a previous one, please contact editor@charityvillage.com. No identifying information will appear in this column. For paid professional advice about an urgent or complex situation, contact Tim directly.

Tim Rutledge, Ph.D., is a veteran human resources consultant and publisher of Mattanie Press. You can contact him at tim_rutledge@sympatico.ca or visit www.gettingengaged.ca.

Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.