Economic uncertainty in the U.S. and elsewhere is causing many companies to limit their salary increase budgets. However, employers can find ways to supplement current financial rewards by paying more attention to the nonfinancial rewards they provide to their employees.
“We typically see more emphasis of nonfinancial reward programs when times get tough,” said Tom McMullen, Hay Group’s North American reward practice leader. “But these programs also tend to be sustained as the economy improves.” McMullen defines rewards as anything the employer provides to the employee that has some perceived value. Nonfinancial rewards include career development opportunities, the opportunity to work in an energizing and exciting work environment, the opportunity for meaningful and challenging work, and attractive job designs.
Nonfinancial rewards can create perceptions of the overall fairness of a rewards program. A study of more than 500 professionals conducted by WorldatWork, Hay Group and Dow Scott, a Loyola University Chicago professor of human resources, found that three of the top five concerns regarding reward fairness focus on nonfinancial aspects of the total reward offering, including career development opportunities, nonfinancial recognition, and employee development and training.
“Reward professionals view career development opportunities as the top reward fairness concern because growth opportunities are in high demand by employees,” said McMullen. “At the same time, career development processes are not particularly developed in many organizations, even though career development concerns are the number one retention issue for employees.”
Companies are increasingly aware that nonfinancial rewards play an important part in employee engagement. Research drawing on Hay Group's employee opinion database—representing about 4 million employees worldwide—shows that five of the most common...