How much compensation is good enough?

carrotEnough has been written on this subject, so I will not try to debate wether  higher compensation is a motivator for employees or for that matter if it could be used as a  retention strategy. Even the Maslow theory fails to explain most of the things in current context we operate in. The fact is that a highly paid employee, is not necessarily be the best performer, neither is compensation the primary reason for a high potentials to leave. Many factors like growth, learning, reporting manager, company brand, culture etc come into play. Whatever the reason may be, employees still move on if they have decided to.
It is important to understand that we all go through multiple stages of motivation in our career life cycle. I believe, the motivation level to work for our organisation, majorly gets defined by two questions and we ask these consciously or sub conciously at each stage of our career cycle.
  • What am I capable of and what’s my current performance? (Perceived, Noticed and Communicated by superiors /peers)
  • How am I being compensated in both monetary and non monetary terms? (Relative to industry standards, my peers and life expenses/liabilities)

These two questions remain constant for most part of the employment life cycle while other factors including influences due to personal situations could keep changing. Also the assumption here is that hygiene factors like culture, employer brand etc are in place and an employee would generally asses these before deciding wether or not to join an organisation.  At any stage if the  answer to above questions is in non conformance to what the individual believes, there is a dissonance. This results in an action which the individual feel is of best for his /her interest and could range from moving on to being disengaged.

While the above questions focus on compensation aspects, they may not always be a significant component or a matter of priority, at every stage of an individuals career. At some stages the monetary factors play a major role while in some stages the non monetary ones.

So while assessing the motivation levels of an employee and their dissonance around compensation (or for that matter any non monetary factors like growth, learning et al) we need to understand the career (& life) stage the employee is in.  This would make a better impact than a blanket growth and development plan that gets discussed once in an year during annual performance appraisals.

Easier said than done, this require managers and corporate leaders who can see beyond the standard employee engagement tools and demonstrate high level of emotional intelligence
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One thought on “How much compensation is good enough?

  1. A very nice article on compensation. Yes, definitely the needs do vary with stages of our careers, but let me tell you – there a lot of souls out there for whom monetary factor was, is and will remain a key consideration in all the stages of their professional career. And moreover, if you suggest that we should define a cycle around each stage, there is only so much generalization that can be achieved. How exactly do we define these stages. The nature and kind of stage/phase may not be the same for all. Well, I am not saying its impossible to provide the necessary stimulators to the employees but, there is always a lag in terms of HR policies vs. employee needs. And these needs are changing by the day and by the hour. And I believe this gap will always remain. What we can best do is try to narrow this gap by past learnings and better understanding of employee expectations as you rightly pointed out. But having said that, there are always going to be some unhappy souls lying around floating their resumes blindly in search of better pay.

    Cheers,
    Deepak

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