Managers tend to use compensation as a crutch. After all, it is far easier to design an incentive system that will do management's work than it is to articulate a direction persuasively, develop agreement about goals and problems, and confront difficulties when they arise." — Michael Beer, Harvard professor of business administration, researcher, and author of papers and books on organization change

Decades of research and dozens of studies show again and again that while money can be a de-motivator, it is rarely a good motivator. Money always shows up as fourth or fifth on any list of motivational factors. Pay gets people to show up for work. But pay doesn't get many to excel. More important is interesting, challenging, or meaningful work, recognition and appreciation, a sense of accomplishment, growth opportunities, and the like.

But the big problem is that managers have consistently listed money as the number one factor that they think motivates people. So they keep fiddling with pay, bonuses, and financial incentives in a futile attempt to find the elusive combination that will motivate people to higher performance.

Bribing people to perform turns them into mercenaries. It debases, degrades, and demeans work. It sets a vicious, self-perpetuating cycle into motion — incentives, inducements, rewards, and the like leave people feeling manipulated and overly focused on what they get for complying with management's goals and direction (tuned only to WIFM — "what's in it for me"). The emptier work is, the more people look elsewhere for fulfillment; so we demand more money and incentives to continue working in such a meaningless, unfulfilling job (which then "proves" to managers that people won't improve their performance unless they're bribed to do so). Money is rarely an effective rallying point for high performance. That’s because money doesn't provide deeper meaning and inspiration for a bigger cause and purpose.

We’re big believers in paying people very well. We agree with the wag that said, "If you pay peanuts, you get monkeys." We have long believed in, and practiced, profit sharing and organization or team performance bonuses. The people who helped create the profits should share in the rewards in proportion to their contribution (which can be very tough to establish).

But more important than the money are the messages profit and performance bonuses can send. They should make people feel like partners, not puppets on a string. That means rewards should follow, not lead high performance. It also means that education and communications, measurement and feedback, skill development, and the like must be tightly melded to any reward and recognition programs.

A high performing organization is filled with higher performers who are well paid. We should pay people well. But once we're sure they feel their compensation is fair and equitable, don't even mention money again until next year. Fix everyone's attention on the bigger and more meaningful issues of Context and Focus (vision, values, and purpose), customers and partners, innovation, goals and priorities, and growth and improvement. Concentrate on building a culture of success and forward momentum with lots of recognition and appreciation for everyone's contributions

by : Jim Clemmer

From India, Patna
Dear Pankaj
It’s a generic view NOT targeting any particular sector, but still if you talk about IT/ BPO sector that pays high salary, my question is even after paying high salaries, why attrition rate in these companies are high?
I worked with IT company, while doing primary discussion with the candidates, most of the candidates I found are getting good salary & they just got pay raise BUT still if still any company is paying more than what he/she is getting, then they are ready to quit the job, its a normal trend every where, so what matters is the culture in that particular organization.
Your company image should not be “good pay master” BUT it should be “best company to Work”.
Salary can be the motivator BUT not on the priority & fully agree with this statement as mentioned in the article.
Cheers
SJ

From India, Patna
Dear SJ,
That is what I want to say, most of the companies are simply raising salaries to buy people and caring less for their real needs. Though employees are taking advantage, but don't know where this mad race will take them too.
I think at this moment, HR need to take strong stand looking for the welfare (in long-term) and not mere short term benefit of employees to break this trend.
India is already facing manpower shortage. Everyone is takling. We need to comeout from this circle and contribute more in development.
Some times back I circulated a presentation, HR in motHeR. You can look at this for more contribution.
I am preparing one more presentation and will be circulating soon.
Regards
Pankkaj Khandelwal
Koncept Learning Center
e-mail:
web: http://klcenter.googlepages.com

From India, Pune
Hello shreeramjoshi2007:

Excellent message.


>A high performing organization is filled with higher performers who are well paid. We should pay people well.<

Notice Jim Clemmer wrote "well paid" not the highest paid.

>But once we're sure they feel their compensation is fair and equitable, don't even mention money again until next year.<

If managers dwell on pay, employees will dwell on pay.

>Fix everyone's attention on the bigger and more meaningful issues of Context and Focus (vision, values, and purpose), customers and partners, innovation, goals and priorities, and growth and improvement.<

Everything was good up to this point. Doing this will not turn our bad hires into successful employees. We may cause them to quit or be fired but management systems do not impact the quality of hires. In other words an employee's talent is unaffected by management's actions and inactions.

>Concentrate on building a culture of success and forward momentum with lots of recognition and appreciation for everyone's contributions.<

But first we need to hire employees who have a talent for their jobs otherwise we will be forever trying to fix them.

Hiring for talent is not hard to do but it must be done if we want to reduce attrition and boost employee productivity.

We find it makes more sense to hire people who don't need to have their attention and focus fixed by their employer.

Bob Gately


From United States, Chelsea
I agree entirely with Bob. First one has to hire talented people. To me, talent is not only about havng aptitude but having the passion to do the job for a fairly long time. Reasearch by Harvard, Morgan and Banks and even Gallup identify one common factor for high attrition- lack of deep interest- http://mypyp.wordpress.com/
From India, New Delhi

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