Base Pay and Monetary Incentives Motivate Less Than Intangibles, Leadership

July 14, 2010 — Washington — As a result of the economic crisis, employers have become concerned about keeping employees engaged after having experienced wage freezes, lost bonuses, increased work demands and downsizing. Motivating employees under these circumstances and recognizing that once the economy improves top talent may leave for other opportunities has created a new corporate battle cry: “Employee Engagement.”

Employee engagement is typically described as high levels of employee involvement, commitment to the organization, and job satisfaction.

But according to a new survey by WorldatWork, Loyola University Chicago and Hay Group, when it comes to engagement, the majority of compensation professionals report that their organizations do not necessarily consider how reward programs affect employee engagement. The survey also found employees have limited involvement in compensation program design — although encouraging employee input and involvement in programs that affect them is a method organizational development specialists suggest to enhance employee engagement and commitment.

These were just a few of the conclusions of the survey, “Impact of Rewards Programs on Employee Engagement,” published in June. The data found that overall, employees have limited involvement in the design of reward programs, with only 11% of respondents indicating that their organization frequently (i.e. often or always) involved employees in the design of reward programs.

“Through our research we have learned that organizations that involve employees in the design, implementation and assessment of reward programs are associated with reward strategies that effectively foster high levels of employee engagement,” said Dow Scott, Ph.D., Professor of Human Resources and Industrial Relations, School of Business Administration, Loyola University Chicago. “Involving employees in programs that affect them offers a direct way for reward professionals to enhance employee engagement.”

Other Key Findings: Work-life Balance, Work Quality and Career Opportunities
Data from the 736 survey respondents also examined the impact different categories of reward programs had on engagement and found that base pay and benefits had a weaker relationship with the organization’s ability to foster high levels of employee engagement and motivation compared to incentives, intangible rewards and quality of leadership. “It is the non-financial rewards — as opposed to the financial rewards — that are viewed as having more impact on employee engagement,” said Tom McMullen, North American Practice Leader for Hay Group. “Quality of work, career development, organization climate and work-life balance all have a greater perceived impact on employee engagement than financial rewards such as base salaries, benefits and monetary incentives.”

“Quality of leadership has a profound impact on employee engagement and motivation,” added Paul Rowson, managing director of the WorldatWork Washington, D.C. Office and Conference Center. “Organizations must think in terms of total rewards and not just financial rewards if they are to enhance employee involvement, commitment, job satisfaction — and performance.”

About the Survey

WorldatWork collaborated with Loyola University Chicago and Hay Group on this survey. WorldatWork members — primarily reward professionals — were invited to participate in this study. The survey was open from December 15, 2009 through January 12, 2010. N = 736 respondents. To read the report, click here.

About WorldatWork®:
The Total Rewards Association

WorldatWork ( is a global human resources association focused on compensation, benefits, work-life and integrated total rewards to attract, motivate and retain a talented workforce. Founded in 1955, WorldatWork provides a network of nearly 30,000 members in more than 100 countries with training, certification, research, conferences and community. It has offices in Scottsdale, Arizona and Washington, D.C.

About Hay Group

Hay Group ( is a global management consulting firm that works with leaders to transform strategy into reality. We develop talent, organize people to be more effective and motivate them to perform at their best. Our focus is on making change happen and helping people and organizations realize their potential.

We have over 2600 employees working in 85 offices in 47 countries. Our insight is supported by robust data from over 100 countries. Our clients are from the private, public and not-for-profit sectors, across every major industry.

# # #

This press release was distributed through PR Web by Human Resources Marketer (HR Marketer: on behalf of the company listed above.