Employee Engagement Linked to Rewards Perceptions

‘Honest leader’ communication also influences engagement

By Stephen Miller, CEBS Jun 1, 2015

New research reveals a strong relationship between how employees view their total rewards package and their overall engagement level.

Aon Hewitt recently surveyed more than 2,500 U.S. employees at midsize and large U.S. companies to determine their perspectives and attitudes about their employment experience. The survey report, Inside the Employee Mindset, shows that:

Among engaged employees, 60 percent said their total rewards overall (i.e., everything an employer provides to an employee, including pay, benefits and the work environment) are above or well above what other employers offer, while only 24 percent of those who are disengaged said so.

Among engaged employees, 51 percent view their company’s career development/training programs as better than what other employers offer, while only 19 percent of disengaged employees would rate these programs as better competitively.

“While we consistently see employees ranking pay as the most valuable reward they earn from their employer, it’s not the only thing that matters,” said Ray Baumruk, partner and employee research leader at Aon Hewitt. Baumruk spoke about the survey results at the 2015 WorldatWork Total Rewards Conference, held May 18-20 in Minneapolis.

“Engaged employees value a more balanced, less oriented toward pay-only rewards package, compared to those who are disengaged,” he noted. “People work to provide for their family, but work means more than a paycheck.”

Perceived Competitiveness

The survey showed that:

Paid time off (84 percent of respondents) and base pay (83 percent) were the most understood of all total rewards programs.

Bonuses (64 percent), career development/training (61 percent) and work/life balance (60 percent) were among the least understood.

Many of the least understood programs were also viewed by employees as the least competitive: bonus incentives/commissions, base pay, career development/training programs and work/life balance were less likely to be viewed as competitive relative to other companies.

“Companies could see improvements in employee engagement by increasing awareness and understanding of these programs,” said Pam Hein, a partner and communications leader at Aon Hewitt, who co-presented with Baumruk at the conference. “Often providing total rewards statements and related web tools can help foster greater understanding,” she advised. “Administering engaging quizzes or quick assessments to employees can also draw attention to rewards that may be undervalued or misunderstood.”

Perceived Honesty and Openness

Among engaged employees, more than three-quarters (77 percent) feel encouraged to share ideas, while only 22 percent of those who are disengaged would agree. Similar gaps exist when considering how open and honest senior leaders are viewed, and how managers share and provide information with employees.

“The most engaged employees are the ones who are encouraged to share ideas and who witness open, honest communication from senior leadership," said Hein. "Offering communication training for managers and leaders, regularly sharing key messages, and instituting performance- and reward-related metrics, related to communication from managers and leaders, will be essential to achieve improvement in this area.”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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