Imagine you're in a management meeting where the main topic is how to attract and retain the best people. Someone expresses frustration with not being able to reward top performers with cash and the conversation segues into topics like engagement and non-monetary rewards.
That's a great conversation for managers to have but it's important not to confuse retention policies with engagement policies. Although there's overlap between how you approach engagement and retention - after all, engagement is the best way to retain people as long as you don't grossly underpay - the target audience is a bit different.
Let's start with engagement: Ideally you want to engage everyone in your company. If you can't engage everyone, focus on the people who have the most impact on customer experience and the highest performance variation, as I wrote about in a recent post Maximizing Your Rewards ROI. That's not the same as focusing on top performers, which is the more common approach.
Engagement creates that wonderful team dynamic that leads to outrageous customer experience and improved performance, with low turnover as an added bonus. Typically, you engage people with something other than money, such as appreciation or increased responsibility, but money may also play a motivational role.
Consider a typical sales clerk at a jeans store. A neutrally engaged clerk shows up for work, responds to inquiries with a baseline of helpfulness and rings people up. An engaged clerk makes people feel welcome and proactively offers sincere - and truthful - advice on the most flattering jeans styles. This is a perfect example of high impact to customer experience combined with high performance variation, which is exactly where you want to focus your engagement efforts. It's also a good place to channel scarce rewards, since the clerk will be more passionate about moving jeans out of the store for a percentage of the sale.
In other words, your strategy toward the sales clerk should be focused on engagement, which will positively impact retention as well.
Now let's look at airline pilots, who have a built-in incentive to perform well, independent of things like salary, appreciation and career opportunities. You don't want to lose your best pilots to a competitor, but you also don't get much value out of trying to 'engage' your pilots. A pilot's job is to deliver people to wherever it says on the ticket. To this end, they've had thousands of hours of training and flight time, so we don't expect wild variation in performance whether they feel engaged at work or not. If they don't meet a baseline level of performance they won't be pilots any more, plain and simple.
In the case of pilots, your primary goal is to retain rather than engage. It's not that you don't want engaged pilots but the business driver is subtly different.
Here's your checklist for retention policies:
- Performance is consistent
- Direct impact on customer experience is low
- A high degree of training and/or experience is required to do the job
For engagement policies, the opposite is true:
- Performance varies from person to person
- Direct impact on customer experience is high
In other words, an engaging culture confers all sorts of benefits but if you target workforce segments with tailored rewards think carefully about your audience and what your goal is - are you rewarding people to motivate them or to retain them? It makes a difference.
In conclusion, here's a little poem I wrote to explain the difference between retention and engagement:
Stay or Play?
Retention gets people to stay.
Engagement turns work into play.
(Don't worry, I won't quit my day job.)
Laura Schroeder is a global talent specialist at Workday, headquartered in Pleasanton, CA. She has nearly fifteen years of experience envisioning, designing, developing, implementing and evangelizing global Human Capital Management (HCM) solutions and holds a certificate in Strategic Human Resources Practices from Cornell University. Her articles and interviews on HCM topics have been published in the US, Europe and Asia. She lives in Munich, Germany and enjoys cooking, reading, writing, kick boxing (well, kicking things) and spending time with friends and family.
Thanks to Laura Schroeder / Compensation Café
http://www.compensationcafe.com/2012/01/retention-v-engagement-stay-or-play.html
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