Employees often feel under-appreciated by their employers. Maintaining the employer-employee relationship is essential for an employee’s satisfaction and a company’s long term growth. Since training is a top three cost in the work place, reducing employee turnover should save costs. Why not focus on employee retention and engagement instead?
In many ways employment is like a marriage. The employer and employee enter into an engagement together with certain expectations. Trading labor for wages is the most basic level of expectation; but most employees aspire to more and have higher expectations over time. If over time the expectations of “spouses” are not met, the relationship will begin to break down. (When I think of this relationship, I always quote my mother: “happy wife, happy life”.)
To promote employee satisfaction, non-financial incentives have been embraced by employers. A Towers Watson survey states nearly half of the respondents (320 U.S. companies) expect voluntary benefits and services to become more important to employees in the next five years. Non-financial incentives can make an employee feel like a valued player and companies can embrace these incentives to retain their top talent and affirm vital relationships with employees.
New employees, from different generations, will have different expectations for starting a career with a new company. Generation Y, the wellspring for new hires, is more interested in flexibility and plans which will mold to their needs. Non-financial incentives will attract employees by offering choice and convenience. These non-financial benefits may be particularly well suited to attracting and retaining the new Gen Y workforce.
Let’s look at some examples of non-financial incentive programs and how they may be received and implemented.
Non-financial incentives: Wellness Programs
Wellness program attempt to reduce absenteeism by supporting a healthy lifestyle. Common offerings of wellness programs include: free health screenings, counseling services, financial counseling, stress-management and exercise initiatives. Often these initiatives are better received if upper management themselves are the first to embrace these offerings and exemplify their importance to their workers. Once the wellness program is established, you can customize the plan to match the needs of your work force. For example, the wellness program could offer community gym memberships (or simply have a gym onsite). An established communication plan is also essential for the use of the wellness program; it is a waste of resources if no one knows about it. Finally, wellness programs can foster a sense of community within your workforce.
Non-financial incentives: Recognition Programs
Globoforce Limited recently did a study on recognition programs and their effect on the workplace. Employees want recognition: 81 percent of participants said recognition made them more satisfied with their work. Recognition programs are typically inexpensive—or free—to the employer; making it a win-win situation for both parties. Despite this, 41 percent of respondents said they had not been recognized in six months or longer. This is a huge opportunity for companies to improve performance metrics, lower their attrition rate, and hopefully attract new prospective employees.
Globoforce’s study demonstrates the positive impact of recognition to employees. 76 percent of consistently recognized employees love their jobs, compared to 37 percent of those who were not recognized within the last six months. Appreciation has been proven to drive performance and improve worker happiness. 78 percent of workers indicated they would work harder if their efforts were better recognized and appreciated. One could call it the “warm and fuzzy” effect.
Employee turnover, and their associated costs, can be reduced significantly through Recognition programs. Employees who don’t feel appreciated are 40 percent more likely to look for a different job.
As Globoforce’s study states: “Employee engagement is linked again and again in studies to motivation, productivity, and increased earnings and profits for companies.”
Non-Financial Incentives: Career Development
Employee training and development is a critical investment for employers to increase employee productivity and retention. As an employee progressively takes on more tasks and responsibilities it naturally leads to career progression. It is important for companies to lay out what formal training is needed but also to structure informal (on the job) training. Informal training typically proves to be more effective and less costly for the employer. Informal training can be a mentoring program, cross-functional training, and team meetings. Over time, this even leads to more comradery among employees.
Non-Financial Incentives: Insurance Benefits
The most common voluntary benefits that people think about are life, vision, disability, dental and accident insurance. There are cafeteria plans offered by many insurance companies to employers looking to offer their employees additional insurance benefits without carrying the cost themselves. Employers typically can get preferential group rates on optional insurance plans that they can pass along to employees. Employers are in a tough position between offering competitive benefits and not inflating costs.
In summary there is a lot involved with creating a desirable workplace for employees to strive in. In the end the effort pays off as shown by some of the statistics from the studies we referenced. On the following page you will find a chart that covers the major categories involved with providing a comprehensive benefits package to employees. It is very thorough in laying out a company’s value proposition by laying out compensation; benefits; work-life; performance and recognition; and development and career opportunities.
Non-financial incentives can make an employee feel like a valued player and companies can embrace these incentives to retain their top talent and affirm vital relationships with employees.”
Importance of Employer-Sponsored Voluntary Benefits and Services Expected to Surge, Towers Watson Survey Finds. Towers Watson. 2013. http://www.towerswatson.com/en/Press/2013/08/Importance-of-Employer-Sponsored-Voluntary-Benefits-and-Services-Expected-to-Surge
Workforce Mood Tracker Spring 2012 Report.” Globoforce Limited. 2012. http://go.globoforce.com/rs/globoforce/images/Mood_Tracker_Spring2012-final_2.pdf