When I was just getting started in my career, a senior HR executive told me that people don’t work harder for more money. Once they get to a point where their earnings allow them to lead a reasonably comfortable lifestyle then money ceases to be an issue.
Eventually, most people feel they have enough and begin to focus on other things.
As someone that is extremely 1. The next time I meet an HR person who cares more about maximizing earnings than myself it will be the first. energized by money 1, this has always intuitively made sense to me. I give 100% effort to everything I do regardless of what my salary (or pay opportunity) is in any given situation. It’s just the way I’m wired. If I’m being paid to do a job I do the job as best I can. If I’m unhappy with what I’m making I can always go do something else.
If this is the way most people approach compensation, however, organizations certainly don’t seem to realize it based on the way they structure incentives.
This morning I read a great article written by Margaret O’Hanlon up at the Compensation Cafe. In it, she talks about the importance of communicating to employees exactly how they can impact their pay opportunity. The thinking goes that many organizations do a poor job of helping employees understand how their actions improve the bottom line – and in most cases with it their incentive pay.
I love what O’Hanlon is going for conceptually here. With that said, I feel like helping employees understand the link between performance and results is value added mostly because it’s a wonderful way to direct the workforce to focus their efforts on what’s really important to the business.
The percentage of any given employee population that likes the work they do is already working as hard as they can – regardless of their pay opportunity. As such, helping them to understand how their efforts impact the bottom line isn’t going to get them working harder – what else do they have to give?
…On the other hand, it will probably get them working on more of the right things.
Do I have this wrong? Tell me in the comments section below.
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