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Can’t buy me love – How higher pay DOES NOT mean higher engagement

And so the song goes “Can’t buy me love… I don’t care too much for money, money can’t buy me love”. Who would have thought that more than 50 years later these words would be ringing true in HR.

Recent cross-sector research from QCG shows that pay in organisations with lower levels of employee engagement is at least 20% higher than it is in organisations that do better on engagement.

So, what is this really telling us?

Factual and anecdotal evidence clearly suggests that high levels of pay do not necessarily drive engagement. This is not to say that high pay erodes engagement either. What we have found is that pay is often used to make up for shortcomings in other areas of the Employee Value Proposition (EVP) – or at least try to, rather unsuccessfully.

And therein lies the challenge, and the opportunity, for HR and reward professionals to re-think their approach and work on the factors that do make a difference for employee engagement.

Granted, pay in organisations needs to be set at a level where it meets employee needs and sense of value. A satisfaction threshold if you will. But the goal should not be to pay more for the sake of it. It should be about paying ‘right’ – and this is where organisations need to depart from the whole ‘pay is a hygiene factor’ concept.

The sense of purpose that employees derive from work and their personal drive for money means that this satisfaction threshold varies across organisations. It is not aligned to a particular market percentile but to the weight of pay and broader reward on their EVP.

Clarity, consistency and alignment of reward then grow on importance as factors to drive engagement.

Therefore we advise organisations to consider reward interventions in the light of their EVP. We encourage practitioners to see reward through the lens of engagement and test their plans against the factors that truly make employees feel passionate, energetic and committed to their work.

These and other findings concerning the links between reward and engagement will be discussed at the next event of the QCG Reward Leaders’ Forum on 28th June.

For more information about research from QCG or our Reward Leaders’ Forum drop us a line.