As the battle for talent continues, companies are increasingly looking toward non-traditional methods to attract key talent, with one such tactic being the use of non-financial rewards. To examine the effectiveness of non-financial rewards, researchers in South Africa looked at the influence of work-life balance, learning, and career advancement on the attractiveness of jobs to potential employees. The results indicated that the presence of all of these reward types increased job attractiveness, but the attractiveness effect was greater on women.
Key Topics: Non-financial rewards; Talent attraction; Recruitment; Retention
Title of Reviewed Article: Attractiveness of non-financial rewards for prospective knowledge workers
Researchers: Anton Schlechter (University of Cape Town), Nicola Claire Thompson (University of Cape Town), and Mark Bussin (University of Johannesburg)
Publication: Employee Relations, Vol. 37 No. 3, pp. 274-295.
Setting the Scene
Increasingly research is demonstrating that the successful attraction of talent can strongly influence overall company success and profitability (Cascio, 2006), and as such employee attraction is typically a key element in companies’ talent proposition and organizational strategies. Seminal research by Schneider (1987) posited that people are attracted to jobs and companies that reflect their personality and interests. Prior research has also indicated that the factors which attract potential employees to a job and company, such as recognition, responsibility, and flexibility can change over time, as people’s life circumstances and other factors change (Amundson, 2007).
To support employee attraction, companies have traditionally focused on offering financial rewards, although changing workplace demographics with different needs have led many companies to also focus on non-financial reward elements, such as work-life balance, learning, and career advancement, in order to differentiate themselves from the competition and attract top talent (Amundson, 2007). Whitaker (2010) found that non-financial rewards improve employee motivation, company culture, and employee loyalty. Such non-financial rewards are typically integrated with financial rewards to produce a more effective and inclusive total reward offering which can have a positive effect on employee attraction, engagement and retention (Rumpel & Medcof, 2006).
Pregnolato (2010) identified six core total reward elements, capturing both financial and non-financial rewards, which were remuneration, performance and recognition, benefits, learning, career advancement, and work-life balance. This study sought to investigate the non-financial rewards identified by Pregnolato (2010), namely work-life balance, learning, and career advancement, and their influence on perceived job attractiveness to potential employees, and whether this attractiveness differed by gender.
How the research was conducted
Data was collected from 180 knowledge workers (e.g. engineers, lawyers, managers, sales representatives, and other skilled professionals) from various industries and different job levels. Participants were primarily South African.
The researchers created eight job ads for fictitious vacancies. Each job ad specified a different combination of the three non-financial reward elements (work-life balance, learning, and career advancement). Participants were randomly assigned to one of the eight conditions, based on which of these jobs ads they were exposed to.
Participants completed two questionnaires based on the job ad they were given. The first was a job attraction questionnaire which assessed the level of attractiveness of the job ad the participant was assigned. The second questionnaire assessed the attractiveness of elements of a typical total rewards package, which included six total reward elements of work-life balance, learning, career advancement, performance and recognition, remuneration, and benefits.
Key Research Findings
The results from the attraction questionnaire showed that job attractiveness was higher when non-financial rewards were explicitly offered in the job ads.
The results from the total rewards questionnaire indicated that people were attracted by all total reward types.
Each non-financial reward element measured (work-life balance, learning, and career advancement) was found to be individually attractive to employees. The results suggest that, of the non-financial reward types, the inclusion of work life balance had the largest impact on job attractiveness, followed by career advancement. However, attractiveness was greatest when all three non-financial reward types were present in a job ad.
Women’s attraction to non-financial rewards was found to be significantly higher than for men.
While the results indicate that offering non-financial rewards increased job attractiveness, there was limited difference found in the level of attractiveness based on different combinations of work-life balance, learning, and career advancement, and as such there was little support found for the use of a specific combination of non-financial rewards being most attractive. This is somewhat contrary to prior research which suggest there is an optimal total rewards packages (Rumpel & Medcof, 2006).
Interestingly, gender differences were found in the attractiveness of non-financial rewards. These findings are consistent with previous research that found that women have a greater preference for non-financial rewards than men.
Organizational and Reward Implications
This research adds further support for the importance of non-financial rewards in the attraction of talent and companies are likely to benefit from offering a rewards package that includes both financial rewards and non-financial rewards.
The finding that women are more likely to be attracted to non-financial rewards is also noteworthy from a practical perspective, particularly given the increasing emphasis on diversity and gender equality in the workplace. Offering a diverse reward package including non-financial rewards is likely to attract potential talent from a wider pool, including women.
The research findings suggest that advertising elements of the company’s reward package as part of the job ad will increase the jobs attractiveness. Given that many companies choose to exclude reward information from their job ads it is likely that they are losing out on potential talent. For such companies, emphasising non-financial rewards as part of a job offering could potentially be a quick win.
This study adds further valuable insight into the importance of non-financial rewards to potential employees and of particular note was their attractiveness to women. While the results noteworthy, as the study was an experimental design the generalizability of the findings should be reviewed with caution. Further research in this area using a larger and more applied participant group would be valuable in further validating the results of this study.
Source Article: Schlechter, A., Thompson, N. C., & Bussin, M. (2015). Attractiveness of non-financial rewards for prospective knowledge workers. Employee Relations, 37(3), 274-295.
Published by: Emerald Group Publishing Limited
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Cascio, W. F. (2006). The economic impact of employee behaviours on organizational Performance. California Management Review, 48(4), 41-59.
Pregnolato, M. (2010). Total Rewards that Retain: A Study of Demographic Preferences. University of Cape Town, Cape Town.
Rumpel, S., & Medcof, J. W. (2006). Total rewards: a good fit for tech workers. Research-Technology Management, 49(5), 27-35.
Schneider, B. (1987). The people make the place. Personnel Psychology, 40(3), 437-453.
Whitaker, P. (2010). What non-financial rewards are successful motivators? Leading industry experts answer your strategic queries. Strategic HR Review, 9(1), 43-44.
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