Attract & Retain Talent
By People Excellence
17 July 2018
17 July 2018
Employers should never assume that paying higher compensation for talent will guarantee an employee long-term loyalty. If your company has recruited somebody because it was the highest bidder, it should come as no surprise when the same employee leaves in the future, having received a more lucrative compensation offer from elsewhere. For this reason, many employers view remuneration as being just one area of an overall rewards package.
Most generally financial incentives are an organization’s formal system of salaries, bonuses and other financial benefits. While financial incentives are important they are not the whole story and various studies have shown that the positive impact of non-financial incentives has so far been underestimated. In some cases, financial incentives make no difference at all to how people utilize their capacity to improve performance. In other cases, impact is only achieved when a combination of financial and non-financial incentives is put together.
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Incentives Positive & Negative Impacts
Incentives can have both positive and negative impacts and sometimes both at the same time. For example, incentive schemes that reward and motivate some staff are often found to demotivate those staff who do not get the rewards, whatever the reason. There is also the syndrome of ‘perverse’ incentives, which are the incentives that motivate people for the wrong reasons. The example of perverse incentives most usually given is that of people attending conferences, meetings or training courses not because of interest in the subject but because of the per diem for attendance that supplements low salaries. Unfortunately aid interventions designed to be helpful for civil servants, such as per diem schemes, allowances and top-up systems, are now seen to have contributed much to this problem. Perverse incentives need to be considered carefully when designing an incentive structure in order to be aware of any potential negative consequences of what might be put in place.
Incentives are one of the main links between people and change. Successful capacity development initiatives are dependent on having the right incentives in place because positive change can only be sustained where improved performance is enabled and rewarded. Incentives are most usually considered at the individual level, defined as either financial or non-financial, and internal or external, but it is also relevant to consider the organizational level and informal incentives.
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1. Sales Incentive Plan
2. Talent Management Approach
3. HR Strategic Framework
4. Compensation Design