B.Saikumar,
You asked - "Will the management be under constant pressure to enagage an employee that too a talented one at that? How to handle it ?"
The vast majority of executives and managers today are attempting to create better products and services, better control of finances, selling more, purchasing better parts and material, engineering better products, and the like or all of these depending on their position. They are in fact attempting to manage/control the work. What they are not doing is managing the people.
Once they shift to managing the people meaning helping the people to decide what to do, how to do it and then do it as concerns all the functions of doing the work whether it be production or selling or purchasing or whatever, people will slowly but surely become more and more engaged. The more engaged they are the less problems they create and the more problems they solve on their own. Pressure/stress on management decreases and so does the number of hours management must put into their work. Fully engaged people are self-managed, self-directed self-starters who love to come to work and are at least 300% more productive than if disengaged.
You also wrote - "Do you think a reward and incentive or compensation system will still fail to motivate an employee to be enagaged ?"
Rewards and incentives generally have negative effects and thus are very dangerous to motivation (read Alfie Kohn's "Punished by Rewards" as he thoroughly destroys the behaviorism of "doing this will get you that"). Compensation is different. It must be adequate to meet the employee's financial needs and not be out of line with other employers.
Besides, management cannot actually motivate employees. Each employee has their own motivations and no other person will ever be able to accurately know them. So it is a waste of time for management to attempt to motivate employees. That said, every employee wants to be a Superstar and no one likes to be told what to do. That is true for you and for every other person in this world. Think about it! Executives and managers who spend their time helping employees to become the Superstars they want to be will be rewarded by their devotion to doing a better job today than they did yesterday and throwing everything they have at their work.
The script to create a fully engaged workforce is quite simple. Rather than spending its time trying to control employees with directives, goals, targets, orders, bureaucracy, mission statements, corporate value statements, visions, and the like, all of which mainly serve to disengage employees, management listens to whatever employees have to say. Management does this often enough to more than satisfy the employee's need to be heard. Management then responds to what was said in a timely and respectful manner to the satisfaction of the employee or better thus satisfying the employee's need to be respected. Once employees realize this will always be done, they realize that they can influence everything in the workplace. This ability to influence everything begets a sense of ownership - that this is just as much their workplace as it is anyone's. In the same way, a sense of ownership begets commitment. This process will also satisfy the employee's needs to have competence, autonomy, and relatedness and with all needs satisfied, they will choose to become engaged.
That simple process will get you a fully engaged workforce. Along the way, you will learn a lot of details from making mistakes such as how to listen, how to conduct sessions to listen to employee complaints, suggestions, and questions, how to respond to what you hear, the values employees have and how they use them, and most importantly how to convert the ~95% of employees who are followers into non-followers (this may not be possible to learn through making mistakes, but it is easy to do and does have a very positive effect on productivity, innovation, and creativity).
Hope that helps, Ben