Rewarding work

6.1. Key Finding

To retain workers companies must offer a job which is richer rather than just making employees richer.

By 2020, designing interesting jobs won’t be enough; jobs will have to become more interesting and stretching over time. Career development must be built into evolving job descriptions.

The importance of salary declines steeply with age – 36% of 16 to 24 year olds name money as one of the three most important factors about their job. That figures slides to 28% of the 55 to 64 year olds. One of the factors driving this is graduate debt. University fees will grow exponentially over the next ten years. The Russell Group of leading universities has been campaigning for a rise in student fees for some time.

“I imagine that many of them are going to be coming out with significant debts and they will be looking to pay those off as quickly as they can. I think they are going to be focused on (in the early stages of their career) salary and bonuses.”  Charles Cotton, Chartered Institute of Personnel and Development.

6.2. Salary versus age – older and graduate workers

At the same time the importance of job satisfaction rises with age. For older workers a satisfying and enjoyable job is paramount.

Those aged over 65 are the most extreme. For them, workplace friendships and a sense of reward are vastly more important than money. This creates an interesting dynamic around employment opportunities for those beyond the current retirement age.

6.3. Rewarding the sandwich generation

The sandwich generation face some very difficult choices between a need to maintain income to support two generations and at the same time having to meet onerous care obligations. Charles Cotton of the CIPD believes that some companies may come to recognise this as an opportunity to gain or retain good people:

“... organisations that are able to be flexible and then build their work patterns around those individuals [i.e. the sandwich generation] may find it easier to attract them and have a competitive advantage over those organisations that can’t.”

In the tight employment market of 2020, the requirement to be flexible will be pushed on employers. They will have the additional pressure of paying enough to retain experienced workers.

6.4. How money fails to motivate

Currently only one in four workers are willing to work at a boring job in return for good pay (see chart below). This reflects a long-term steep decline in our willingness to tolerate boredom. We expect this trend to continue in the long term (although the recession of 2008/2009 may cause a small blip). As a society of workers we will continue to expect more stimulation in the workplace.

Asked to rank their priorities in seeking a new job, 36% of British people chose ‘an interesting job’ while 20% chose a ‘good salary’ according to a 2009 survey for Eurobarometer.

6.5. The challenge for management

We make the case that people find greatest reward in the job itself. Therefore job roles need to be finely engineered to be appealing to elite workers. The real challenge for managers of people is not in designing the job role but in ensuring that it offers development and that it continues to stretch people years after they have taken up the role.

Ian Brinkley agrees that by 2020, workers will be looking for a higher level of stimulation at work and that job development will be critical:

“...you can interpret a lot of the data to suggest that employers get the initial job right. They attract people into it and then don’t develop the job. As people gain experience the initial novelty wears off... I’m pretty certain that’s why you’ve still got these very high reported levels of people saying that the job doesn’t make the full use of the skills they’ve got.”

For graduates – many of whom enter the job market with high expectations of working life, job development is central to how rewarding their work life is. To retain these workers, companies will have to work harder on developing people.

6.6. Reward packages

By 2020 it is likely that remuneration packages will be simpler without many of the benefits we see today. To an extent this will be due to wary employers taking less of a role in pension provision. Among the experts on our Delphi Panel only half agreed that companies will compete for the best people through high quality pensions – 33% of the experts thought this 2020 scenario extremely unlikely.

It is our view that, by 2020, bonuses will be less common as part of packages. Public opinion has been influenced by bonuses awarded to bankers. Nervous companies, aware of public hostility towards bonus payments, may scale them back in favour of increasing salaries. Companies may feel that bonuses are counter-productive, leading to actions which can be selfish or even anti-social. Public sentiment has turned – for example many feel that it’s inappropriate to award bonuses to NHS managers as it rewards actions which may not be in the best interests of patients.

A clear majority of workers would prefer to have the ability to choose their own benefits (see chart overleaf). Older workers are the least likely to agree to this perhaps because their own financial situations are more assured compared to youngsters.

Charles Cotton of the Chartered Institute of Personnel and Development believes that pay will be tied ever more tightly to performance and to the desire to retain talent.

“I think at the top end there are a lot of governance issues so I think organisations may be a bit reticent in giving out rather large bonuses to the top executives unless it’s deferred over a number of years or they can really justify it or have a good story to tell to shareholders and to the media. Our reward management survey shows that one of the key changes planned for 2010 by our sample was that they were going to differentiate the pay award and the bonus award between high performers and normal performers. Rather than smearing the pay award around, it’s going to be more targeted towards those people who either add most value to the organisation or who the organisation really needs.”

Lynda Gratton, Professor of Management Practice at London Business School, believes that current reward systems often stifle creativity and innovation.

“Now, many of our companies have become very competitive. Reward systems pit people against each other and it gets difficult, therefore, really to be cooperative. These companies that are competitive, tournament-based, create the big freeze [i.e. a working environment characterised by low morale and interaction which is poor in creating new ideas].”

Gratton argues that cooperation is vital in creating dynamic and successful teams who are capable of delivering innovation. To foster this sort of cooperative environment, managers must coach and mentor effectively. Hence many organisations will need to improve people management skills.

6.7. Conclusions

It’s a mark of the rising affluence in this country since the war that we’ve come to define rewards in non-monetary terms. We believe that by 2020 UK GDP will have continued its resolute upward growth bringing greater prosperity for most. The consequence of this is an insistent desire for stimulation and growth at work, a desire that will create new demands of people managers.

Download this chapter pdf 202 KB Back to Top