Pay, Performance Link Weakens

December 18, 2000 ( - Employers are increasingly turning to non-monetary rewards to recruit and retain employees as workers continue to express a preference for recognition and advancement, according to a new study.

In fact, only about a quarter (24%) of employers view rewards as an incentive to improve performance, according to the fifth annual Watson Wyatt Strategic Rewards survey.

The most common non-monetary rewards this year were:

  • advancement opportunities (76%, up from 60% a year ago)
  • flexible work schedules (73%, up from 64%)
  • opportunities to learn new skills (68%, up from 62% last year)

Pay Raise?

Top employee performers were asked to rank the most effective reward programs. The top five for workers under 30 were:

  • Opportunity to develop skills
  • Opportunity for promotion
  • Compensation
  • Vacation/paid time off
  • Type of people/culture

On the other hand, in considering a new job,

  • compensation was rated as one of the top three attracting factors for all demographic groups
  • benefits were rated in the top three for all groups, except for those under 30
  • having the opportunity to develop skills was rated in the top five for all groups

Y2K Shift

Nearly half (48%) of employers surveyed offered stock options/grants to employees, while a third (35%) offer group incentives and 29% provide project incentives. With the passing of Y2K, there was a significant move away from technical pay premiums and paying above market that characterized that unique retention challenge.

The survey included responses of 410 employers.

You can check out a summary of the report