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. Can't buy me love?

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 – or at least try to, rather unsuccessfully.

And therein lies the challenge, and the opportunity, for HR and reward professionals. This is 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’. 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. Instead, it is aligned to the weight of pay and broader reward on their Employee Value Proposition.

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

We advise organisations to consider reward interventions in the light of their Employee Value Proposition. We encourage practitioners to see reward through the lens of engagement. Plans should be tested against factors that make employees feel passionate, energetic and committed.

For more information about research from QCG drop us a line.

Juan Novoa, Lead Consultant at QCG – June 2017