Feedback and Appreciation Are Great, But Cash Is Where It’s At

Providing employees with specific information on their productivity is one no-to-low-cost way to drive improvements in their performance.

A recent Harvard Business Review Daily Stat (To Boost Workers’ Productivity, Tell Them How They Rank) reminds us of this reality via the story of a German wholesaler that saw an average (and apparently sustained) jump in average productivity after sharing information about employees’ relative performance.

When the conditions are right, most of us will respond positively to feedback that either points directly to actions we can take or triggers an instinct to better our showing relative to our peers.

An important fact about the employment relationship

Appreciation, we all know, can work in a similar way — big bang without the big bucks (and without a lot of the baggage that can accompany the delivery of those big bucks). Having our work recognized, knowing that somebody notices what we do and cares enough to directly acknowledge it — this is powerful stuff and it can have a tremendous impact on work energy, motivation, and performance.

Amid the exciting possibilities of all we can achieve with feedback and appreciation, it can be easy to lose sight of an important fact: The employment relationship, when you strip away all the bells and whistles, is an economic one at its core. And the foundation of that economic transaction, for most workers, is their cash compensation.

Right or wrong, good or bad, this is what’s top of mind for the average worker when they take toll of the “rightness” of the employment exchange.

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Appreciation is great, but cash is where it’s at

In my conversations with workers, I find many are particular sensitive to this balance — top performers often acutely so. They believe that when their efforts create economic value (e.g., profits) for the employer and other stakeholders, that they should reap some of the rewards of that success. In their minds, this might be through increases to base salary or some type of profit-based incentive award.

The point? While feedback, appreciation, and the well-placed “thank you” may deliver motivational impact that a cash award or raise does not, we cannot overlook the importance of the cash package as the baseline of the employment relationship. We must get cash compensation right, and do the communication and information sharing necessary for employees to understand how this critical baseline of the relationship is set and managed.

If we fail this, and if employees believe that there is a fundamental imbalance at the core of employment exchange, chances are good that our efforts to provide sound feedback and express genuine appreciation will fall on deaf (or at least highly skeptical) ears.

This was originally published on Ann Bares’ Compensation Force blog.

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems.

Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University.

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