December 9, 2007

Human nature is such that it gets stimulated most through steady flow of rewards even though they may be small. They key is frequency rather than magnitude of reward. I was just wondering whether this fundamental human nature can be exploited to tackle the menace of attrition in organizations.

We have appraisal system that may be quarterly, half-yearly, or annual affair. Bulk of the reward comes annually through promotion, raise, trips, bonus, etc. Even though many companies give rewards half-yearly, the proportion of these is extremely low in the total reward universe.

I have a simple question - can't we divide the annual reward package into many smaller parts to give at regular interval to employees and associates? This would not put significant additional burden on the organization but will definitely play a psychological trump card to engage employees. And even the additional burden would turn out to be much less than the cost of attrition.

The biggest advantage of this reward mechanism would be its role as a motivation accelerator. Frequent rewards in various monetary and non-monetary forms can help in effective engagement while keeping the morale of employees high. These small but frequent rewards would act as a validation of their capabilities and talent. These would force them to think that they are valuable for the organizations and their contributions matter in the well being of the organization.

I feel it's worth experimentation.

2 comments

  1. Manish // January 4, 2008 at 11:48 AM  

    I think it is practiced in some companies.

    But if the reward are small wont they lose relevance. Example: a one time bonus of Rs. 50000 vs. 12 installments of Rs. 4000 (Rs. 2700 after tax) One would just consider this as CTC and use it as a base salary for negotiations with a new comapny. My vote for lumpsum rewards...

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