Most employees value many benefits, perks and recognition in ways that are well beyond their explicit

cost. In this way, here again it is disadvantageous to provide straight cash to employees. There is
significant data in the field that suggests many forms of non-cash recognition far outweigh actual dollar
cost of such. Employees by and large will, given a preference, indicate that they prefer cash. But if you
measure employee happiness, those that receive recognition (a phone call from the chief business
officer, for example) will be much more energized and productive than the employee who received
cash-

A DETAILED UNDERSTANDING OF ALL THE 3 HBR ARTICLES

“What matters more to your workforce than money”

Author: Andrew Chemberlain. (Jan 17th, 2017) – Harvard Business Review Journal.

Why culture matters more than salary?

When you think about what you enjoy most about your workplace, what comes to mind? Is it the type of
work you do, the colleagues, the office perks, the problem you are solving, or the
money?  Many managers think that their employees leave for higher salaries whereas 80–90% of
employees actually leave for reasons other than money.

In fact, another study found that companies who had highly engaged staff through an excellent office
culture, took fewer days for illness, and would recommend their company more to others.

But it’s not just sick days and referrals from happy employees that you need to be thinking about.
Turnover is another major concern. Some studies predict that every time a business replaces a salaried
employee, it costs 6 to 9 months’ salary, on average. For a manager making $40,000 a year, that’s
$20,000 to$30,000 in recruiting and training expenses.

So, why does all this matter? Besides, can’t you just increase salary until everyone is happy? Well, the
short answer is: no. Even if you had an unlimited budget, your highest achieving and most highly
motivated employees would still leave you.

 “How incentive pay effect Employee Engagement, Trust & Satisfaction”

Author: Chidiebere Ogbonnaya, Kevin Daniels, and Karina Nielsen. (Mar 15th, 2017) – Harvard
Business Review Journal.

In an article for Harvard Business Review, Chidiebere Ogbonnaya, Kevin Daniels, and Karina Nielsen
share their research on the subject. Their study indicated that performance-related pay was positively
associated with job satisfaction, organizational commitment, and trust in management, while company
profit-related pay did not have the same positive effects. When it comes to share ownership, a direct
negative relationship with job satisfaction and no significant relationships with employee well-being
were found.

Bonuses Should Acknowledge Employees’ Work Efforts

Rewards are all about matching the mentality of employees, and how you frame the meanings and the
significance of the reward. Contrary to what many employers believe, profit-related pay and share-
ownership may not generate positive effects, as they were found to have negative relationships with
employee well-being. An exception to negative effects for profit-related pay is when distribution of
organizational profits is perceived to be equitable. Profit-related pay and share-ownership may also
leave a bad impression that employers only care about collective profits rather than individual
contribution, and profit shares may be viewed unfair if the distribution process is not transparent.
Performance-related pay was, however, positively associated with employee well-being, which makes
sense because people feel individual pressure to work harder to obtain an individual reward.

On the dark side, the study found that experiencing pressure can negatively affect employees’
perception of job satisfaction, organizational commitment, and trust in management. Indeed, no one is
happy having to work too hard and undergoing too much pressure. Performance-related pay can be a
nuisance, or just insufficient considering the amount of work and the intensity level of the job. The
authors conclude with this:

… Our results regarding work intensity and individual-based incentive pay should give managers
pause. In some circumstances, performance-related pay may be experienced as a burden that only
provides extra pay for workers through an intensification of the work process. This raises critical
questions regarding the extent to which individual-based incentives can influence employee well-
being in a sustainable way.

“Compensation & benefits for start up Companies”

Author: Joseph S. Tibbett’s, Jr. and Edmund T. Donovan. (Jan-Feb 1989 issue) – Harvard Business
Review Journal.

Defining a compensation strategy is an important activity for all companies, including start-ups. The
compensation strategy must be affordable, structured and reasonably competitive.

There are two main components of a compensation policy: salaries and equity.

An equation with only two variables? Should be pretty simple, right? Well, not when you are talking
about something as symbolic as money.

Before all, let’s remind the core principles of any good compensation policy:

·         Being as objective as possible: this ensures fairness and acknowledges a basic truth: people talk.
The goal is to ensure fairness, real and perceived (more or less the same package for the same position,
all things being equal).

·         Compensation needs to be adapted to market practices (especially, to local practices).

 Compensation Strategy:

Your compensation strategy must be structured to best meet your unique business circumstances. As a
start-up, you may not be able to compete with large companies on salary. Therefore, you should
consider a combination of options to attract and retain key employees.

Do not underestimate the value of the advantages or perquisites that your company has to offer that
may not be readily available in larger companies—opportunities for interesting work, lack of hierarchy,
flexible environment, and so on. Some people are motivated by the desire to be on the leading edge of
scientific or technological advances. They may take less pay to work for a start-up if they believe in its
future and the work it has to offer.

Incentives: Drivers in attracting the best employees:

Compensation can be divided into salary, benefits and incentives. While salary and benefits must be
competitive, incentives are the most likely drivers of attracting and retaining the best employees in
start-ups. 

 MY INFERENCES/OUTCOMES OF THE STUDY:

Article: 1- Improving your culture

Additionally, according to the Great Place to Work, a strong culture:

·        Creates a sense of purpose and alignment across the organization.

·        Helps you attract and retain employees.

·        Strengthens the company’s brand.

·        Makes it more likely your employees will express pride and speak positively about your company.

Article: 2 - Many recent researches and experts have both pointed out and opined that people at work
seek self-actualization. It is the deficiency in self-actualization and transcendence that leads them astray
from the purpose of the organization and they lose the connect.

There is not enough evidence to draw conclusions within the scope of the research, but the researches
have assumed fluctuations in stock prices to be one of the reasons behind a negative relation.

Of the three, performance-related pay has been found out to be the only type of contingent pay that
makes employees feel their work is too demanding and the time needed to get work done is insufficient.
Work intensification can be counter-intuitive to the feelings of job-satisfaction, trust in management and
commitment in employees. It may also lead to employees feeling underappreciated and undervalued
which may cascade to a poor attitude towards work. The research sums up that individual incentive may
end up being counterproductive if there is “imbalance between intensive work effort and the availability
of commensurate rewards.”

Article: 3- Establishing the fixed salary

The best way to establish the base salary is to look at a benchmark of Comparable Company.

Yet, you cannot just rely on benchmarks since you won’t have the time to have continuous and
granular benchmarks for every position in your company.

There Is No Golden Figure, So Focus on Range:

A good approach is to design ranges of compensation (eg: 10–15% is a good rule of thumb) attached to
the different levels of seniority for a given position. 

Variable Salaries: Aligning, Boosting and rewarding actual outcome