Forget perks; organizations can use this guide to sustain long-term engagement.
By Maria Selvaggio
HR professionals spend a lot of time thinking about company culture and employee engagement. But how do they keep the best employees engaged? The answer is complicated, and many companies have taken the wrong approach by throwing in as many perks as possible to try and make their employees happy. However, some of the companies with the most perks have the least engaged employees.
The Employee Hierarchy of Engagement
As a personal finance start-up, M1 was going through a hiring spree in late 2021 and early 2022 when start-ups were experiencing a bullish market with plenty of VC funding flowing in. As new employees started, ideas for perks came with them. The HR team got caught up in trying to keep up with the latest and greatest perks being offered by competitors, but noticed that the benefits were not positively impacting engagement scores. So instead, the company decided to focus on the things that mattered by using the “Employee Hierarchy of Engagement,” modeled after Maslow’s “Hierarchy of Needs.”
Building the Pyramid
To build the pyramid, HR teams should start with the base level of an employee’s basic needs. These things include a salary warranted for the work they do and benefits that ensure care for their families. A company can have all the free food in the world, but if that company doesn’t offer the health insurance needed by an employee’s family, they will see weakened retention.
The base level is particularly pertinent in periods of economic instability, like now with the looming recession. During these times, employee priorities get condensed to basic needs and things like in-office ping pong tables fall away.
An HR team works to ensure employees don’t need to think about this level. Organizations should offer generous healthcare for employees and dependents and should also constantly reexamine their salary bands. When salary bands change or when job offers are above their current employee’s salaries, they should adjust their current employees’ compensation. Salary adjustments are becoming increasingly important as cities like New York are instituting laws that require companies to post salary ranges in their job listings. With this level of transparency widely available, an employee will always know if they’re being fairly compensated.
The Lifestyle Level
At the next level, the logistics of an employee’s lifestyle is taken into consideration, like the ability to work remotely, amount of PTO, travel expectations, commute, flexibility to go to the doctor during the day, and more.
Employees can opt-in or opt-out of this level, and the best an HR team can do is to be open and honest about what their logistics look like. The particulars of the company’s culture are not likely to change, and they will either connect with an employee or they won’t.
For example, if there is a job that needs to be done in-person, employers can’t make exceptions for employees who want to work while traveling or on vacation instead of using their PTO. Although a business can make exceptions and allow some employees to veer from the norm, these exceptions can detract from the overall company culture. Other employees may resent the employee who isn’t required to follow the rules and begin to disengage, or HR teams will have to carry an unnecessary burden, like keeping track of different state compliance laws or tracking many different PTO policies. Organizations may think that they’re keeping their employees happy when they make exceptions, but in reality, they may be creating more disengagement.
The Three Culture Tenets
The next level is a north star for enhancing company culture. If leaders are ever unsure what employee engagement initiatives to prioritize, they should revisit the three culture tenets and measure themselves against them.
The three culture tenets are:
- A good relationship with one’s manager.
- Day-to-day work that leaves one challenged and fulfilled.
- The ability to see oneself grow at the organization.
For an organization, this means empowering managers by offering new manager training; building templates for managers to have difficult conversations; and setting expectations around team building. Business leaders should also strive to create fulfilling work and make sure every individual knows how their work impacts the overall goals of the organization.
Employees are more satisfied and motivated when they understand how their work fits into the organization’s goals and when they can celebrate the wins and recalibrate the losses. Further, to ensure employees can see career growth, prioritize internal lateral transfers and hiring from within. An organization should also publish their career ladders and train their managers on how to talk about their direct report’s career goals.
The work can be challenging, but in the end, it’s worth it.
Getting to the Top
Everyone loves this level, but it can be wasted energy. There are things like ping pong tables, free snacks, meditation apps, gym memberships, and parties that are used to hide the fact that organizations are overlooking base levels of the hierarchy. These perks don’t hurt, but they certainly won’t be the reason someone stays at a company for the long haul. If a people team spends all their time adding on perks, they’re spending valuable resources that could be used elsewhere.
There are, however, a few perks that are worthwhile and can help strengthen company culture in the long run – such as paying to bring remote employees together once a year for a company offsite or retreat or hosting a “Bring Your Family to Work” day. Extras like these are more meaningful and give employees a reason to come together, get to know each other, and contribute to the company culture.
Leveraging the Pyramid
By using the hierarchy, M1’s HR team has allowed employees to understand their priorities, which has created transparency around the work of the people team. HR knows where to focus and not waste time, energy, or resources on the things that matter least. It also helps HR to better understand the employee base and gives them a framework as they work to increase their engagement score. Employee engagement means so much more than simply employee satisfaction – it’s how success is built for years to come.
Maria Selvaggio is the VP of people at M1.