According to a recent study by Hewitt Associates, a Lincolnshire, Ill.-based consulting firm, pay hikes don’t motivate employees as effectively as incentive and reward programs do.

The main reason for this, according to Julie Peterson, a Hewitt consultant, is that salary is only weakly linked to performance.

“Top performers will generally receive a 5% salary increase, while low performers will receive a 3% increase per year.

“That extra 2% doesn’t motivate employees to work harder and come in on weekends when the low performers are just punching the clock,” Peterson says.

To offset this, companies are now budgeting more for incentive programs. An example of this type of program is an employee-of-the-month program where recipients generally receive merchandise or travel.

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PROGRAM

This entry was posted on Friday, May 30th, 2008 at 5:32 am and is filed under Entrepreneurs & Small Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.