Thinking Beyond the Annual Pay Raise
Published by: Online Rewards Employee Recognition
A recent article in the Wall Street Journal reports that many companies are moving away from annual pay raises for their employees. When annual raises are given to all employees with little differentiation, they are not effective in improving performance; nor do they demonstrate that the company appreciates or even recognizes the employee’s contribution to the success of the business. Companies that understand this are considering a bonus structure based on performance. Annual raises have hovered around 3% for the last 5 years. Will shifting those dollars to bonuses for top performers make an impact?
What do you do when monetary compensation is no longer motivating?
Progressive companies understand that properly-structured customized reward and recognition programs can improve performance by an average of 22% -- and by as much as 44% when teams are rewarded. In many performance improvement programs, it’s common for top performers to be rewarded. While it’s important to reinforce those results, your top performers are likely to continue to excel because that’s what they do. Likewise, the bottom 20% of your workforce is not likely to expend additional energy no matter how much you pay them. It’s the 60% of your workforce in the middle that can produce the greatest performance gains if properly motivated. An effectively designed employee incentive, reward or recognition program will maximize performance improvement and provide the greatest gains.
Executives as well as employees consider reward and recognition programs to be valuable, but 98% believe that the programs would be more successful if properly implemented. Working with a firm that specializes in employee engagement will take all of the guesswork out of incentive program design. You’ll be sure to have a program that achieves your objectives and delivers a measurable return on investment.
Corporate incentive reward and recognition programs attract quality employees who will work harder and smarter when they are valued, recognized, and rewarded for their efforts.