Nonfinancial Factors Seen as Key to Improving Motivation

Employee loyalty is dropping in the U.S. and worldwide, according to the analysis in Mercer’s October 2011 What’s Working survey report. The research—conducted from the fourth quarter of 2010 through the second quarter of 2011 in different global regions—shows that the percentage of workers seriously considering leaving their organization has risen since the last time the survey was conducted prior to the economic downturn. In many markets, the increase is 10 percentage points or more. In the U.S., the increase was 9 points, from 23 percent in 2005 to 32 percent in 2011.

“Widespread apathy and high turnover can be detrimental to an organization’s business performance, especially in the difficult economic environment we’re experiencing as companies are looking to drive productivity and efficiencies,” said Mindy Fox, a senior partner at Mercer and the firm’s U.S. region leader.

“Our research shows that, despite the ongoing economic uncertainty, more employees would consider leaving today for a better opportunity,” added Pete Foley, a principal and North American employee research leader at Mercer.

What Motivates Employees?

The analysis reveals that nonfinancial factors play a prominent role in influencing employee motivation and engagement worldwide—a finding that could prove useful to employers facing budget constraints. Workers say that being treated with respect is the most important nonfinancial factor, followed by work/life balance, type of work, quality of co-workers and quality of leadership.

Among financial factors, base pay ranks highest. Benefits and incentive pay can be important to other aspects of the employment deal—such as attracting, retaining and rewarding employees—but they are considered less important by employees when it comes to their day-to-day motivation and engagement at work.

“Employee engagement reflects the total work experience, and a big part of it is how you are treated, what kind of work you do and how you feel about your co-workers, bosses and the general work environment,” said Colleen O’Neill, a senior partner at Mercer and the firm’s talent leader in the U.S. and Canada.

“Without a doubt, financial factors like pay and benefits are a vital part of the employment deal, especially in the U.S., but employers need to consider and manage the full range of factors to ensure that their workforce is engaged,” O’Neill explained. “When financial resources are limited, organizations can leverage these nonfinancial factors to effectively boost employee commitment and productivity.”

In the U.S., the importance of financial and nonfinancial factors closely mirrored the global findings. Two areas that scored higher among U.S. employees than the global average were benefits and working in an environment that enabled them to provide good service to others. Factors below the global average for U.S. employees included learning and development opportunities, promotion opportunities and incentive pay/bonus.

Factors Influencing Motivation and Engagement at Work: The Americas

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Factors Influencing Motivation and Engagement at Work: Europe

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Factors Influencing Motivation and Engagement at Work: Asia Pacific

Source: Mercer What’s Working survey, 2011.

To arrive at the results regarding what motivates employees, Mercer asked survey respondents worldwide to consider both current and previous jobs and state how important 13 factors were in influencing their motivation and engagement at work. The top rating of “extremely important” could only be used for the one or two most important factors. Scores are assigned to an index of 100 to show relative importance by market and globally. Scores near 100 are of middle importance, scores above 100 are more important and scores below 100 are less important.

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Stephen Miller, CEBS, is an online editor/manager for SHRM.