Perception of Pay: Powerful Engagement Factor

Check out these numbers…

Employees who understood how their pay was determined.  67% engaged

Employees who didn’t understand how their pay was determined. only 32% engaged

Workers who knew how to maximize their pay.  73% engaged

Workers who did not know how to maximize their pay.  only 33% engaged

Employees who believed pay was related to performance.  77% engaged

Employees who didn’t believe pay was related to performance. only 40% engaged

Source:  HR Magazine, September 2014

Pay may not be the best motivator, but it is truly a powerful engagement detractor.  The lesson: Make sure you have a transparent, easy to understand pay plan that is tied to performance.

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2 thoughts on “Perception of Pay: Powerful Engagement Factor

  1. This is absolutely right on. Transparency and understandability about compensation decisions is critical. Too many times the systems around pay are not well understood or communicated because they are driven by HR rather than a tool for management.
    Engagement is about alignment and if there isn’t clear line of sight between performance and compensation you have big issues.

  2. Agree completely with Mr. Herbert, but see no reason line of sight to goals with performance and pay cannot be achieved if driven by HR. The key is to understand the behaviors (that illustrate core values of course) a company wants to reward to reach goals, then design all the systems around those. Many companies have been on this track for some time, “the culture definition” piece. I do find that pay transparency is becoming more prevalent, and can drive a culture of “truth talk” regarding performance. Everyone wants to know why they get paid what they do, and how they can do better to earn more!

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