Motivation system: carrot in front or carrot in back

Published on November 08, 2017

Motivation system: carrot in front or carrot in back


    We can talk about staff motivation for as long as about Russian football or Ksenia Sobchak’s nomination as President of Russia. Is it possible to motivate people solely through compensation? Why do companies use a whole arsenal of benefits to work with staff? Under the cut, the opinion of Parallels HR manager Arina ANTONOVA.

    Motivation vs Compensation


    For starters, you should immediately agree on the basic concepts and definitions. For example, motivation and compensation are of a different nature.



    Motivation is a person’s moral state. It usually forces us to take any action. It can be a need, desire, need or interest in something. Motivation is divided into positive and negative. For example, when you are scolded, it can also be part of motivation, though with a minus sign.

    Compensation is a physical expression in monetary terms. There is also a difference between compensations and benefits (benefits )) Compensation is a salary and its derivatives in the form of bonuses, and benefits are an addition to a salary in the form of pleasant “goodies” that do not always have a monetary value for a particular person.



    In addition to the salaries that each of us receives, various bonuses are possible. In the case of Parallels, we conduct staff evaluations twice a year. Based on the results, either a base salary rate or a premium may be reviewed. In addition, in the case of our sales department employees, we are also talking about paying a commission, i.e. percent of sales.

    The peculiarity of compensations is that they are individual and are prescribed in labor contracts with each employee. Amounts of payments are somehow fixed on paper.



    If we are talking about benefits (benefits), then they are usually given to all employees, without exception. In our case, these things include: insurance (VMI), parking, paid meals, fitness, bonuses for attracting new employees, corporate training, including English, payment for participation in professional conferences, corporate events, gifts and much more.

    In fact, the market situation affects the list of benefits. Today we compete with other employers in all positions. Competing wages is harder. And not always your payroll allows you to make maximum salary offers to potential candidates. In this regard, a system of benefits (benefits) comes to the rescue.

    Many or few?


    How to understand what a potential employee needs and how competitive your proposal is? In case of compensation, we regularly monitor the market, correlating our positions with others. With benefits, everything is easier. There is a certain list of what is usually provided to employees in IT companies. There are about twenty positions. We look at how our set of benefits fits the market and strive to form the optimal offer. For example, in some IT companies, in addition to VHI, employees are assisted with placing children in kindergartens. We do not have this yet, but we know what to strive for. At the same time, not all companies compensate for meals for their employees or parking spaces, but we at Parallels do it. This is such a tetris, where you constantly need to look for the optimal balance of needs and opportunities.



    Motivation vs Loyalty


    Why all this? Obviously, the employees were happy to work specifically in your team. Some companies even have such a position - a manager for happiness. Its task is to create the most comfortable working atmosphere for everyone and everything. All in order for your motivation system to stimulate the staff as much as possible. Moreover, it is important to understand that motivation and loyalty are also different things.

    Motivation is what allows you to work further, achieving more and more great results. Loyalty is what keeps you in a particular company. Loyalty holds you, motivation moves you.

    Benefits create loyalty, salary affects motivation. At the same time, it must be said that one without the other does not particularly work. Why? Because when they increase our salary, it increases our motivation. Either because we are given a chance, or because we feel that we were appreciated. Benefits do not give such an effect, since they are accessible to everyone.



    Human nature is such that we all quickly get used to our income level. Each time increasing our standard of living, we hope for a possible increase in income in the future. Therefore, exactly in the N-number of months, for everyone individually, we begin to feel sad about the recently raised salary. An increase in salary, as a tool to increase motivation, works, but not for long. As for the benefits, they are not responsible for motivation at all. They are needed primarily in order to keep a person in the company. If an employee starts looking for work and price offers are comparable, the person will look at the secondary things that the company offers. These are just the benefits. And if your benefits system is better, it is more likely to stay with you. Until the moment he is offered a double salary, of course. Although,

    No more pouring! (with)


    Let's touch on a situation when certain benefits are taken away from you. This is usually an unpleasant story requiring explanation with employees. In fact, we all understand that benefits are the goodwill of the employer, not enshrined in the employment contract. At the same time, the situation when you were compensated for parking yesterday, but today there is no such opportunity, affects loyalty. This is thin ice. It’s not worth hacking here. Moreover, both from the point of view of introducing any new benefits, and their exclusion from the list. For example, at Parallels, we try to regularly conduct surveys among employees to understand the feasibility of an initiative.



    Often you hear the opinion that any benefits are worse than financial payments. Often people say that they would exchange participation in a particular corporate event for an equivalent in monetary terms. But you need to understand that, for example, in Russia, the company’s expenses for compensation and benefits go in different directions from the point of view of taxation. In one case, payments to the social insurance fund must be added to the amount, but in the second case not. The situation varies depending on the country and the rules there. Parallels has 10 offices around the world and everywhere has its own specifics. For example, in Estonia all our corporate events involve additional tax deductions for their organization. Sometimes it doubles the budget. They promise that soon the situation will change.



    In the meantime, everything is as it is. But what if employees say that they do not need certain benefits. There are several options. First, listen and adjust the system of benefits if such appeals are widespread. In the case of a single treatment, you can relax, because you will not please everyone. The third option, if possible, is to organize a Benefit Cafeteria.

    In many progressive companies, employees are offered the right to choose those benefits that are more suited to their needs and interests. The system is simple. Existing benefits are ranked by points. An employee is given a certain amount of points for which he can choose an individual set of benefits for himself. The system is beautiful with one minus - its implementation is more expensive. When working with a standard volume of services, companies, as a rule, receive volume discounts from counterparties.



    Summing up all of the above, it is worth noting once again that the compensation system, as a rule, works effectively in close conjunction with the benefits. It is like walking on two legs. Today there are very few companies, especially in IT, working without a benefit system. It's like trying to jump on one leg in an obstacle course. Of course, you can do this, but victory is not guaranteed. Will we discuss it?