What went wrong?
At this year’s Euro ‘16 tournament, the England football team suffered one of the most embarrassing defeats in its history. The team lost to Iceland, a country with a population the size of Leicester and with a 23-man squad that cost less than one English player, Raheem Sterling. In the aftermath, manager Roy Hodgson has resigned. There are now questions being asked about Hodgson’s salary, which was the highest of the national team managers at Euro 2016.
The English FA has argued that it’s vital to offer a salary that can attract top quality managers, and Hodgson’s £2.9 million pay packet looks less extreme when compared to the £10 million that Jose Mourinho is set to earn at Manchester United. However, as the FA’s CEO Martin Glenn has acknowledged, it will be vital for the next manager’s salary to be linked more closely with their performance in terms of team success. It’s clear that there’s a balance to be struck between offering remuneration that matches the market rate, and linking it to performance. This is a challenge that all businesses face – how to attract and retain the best talent without paying over the odds.
As a starting point, it’s vital to first benchmark salaries against both the industry and the region. Just as the FA won’t attract a world class manager without a multi-million pound offering, businesses won’t attract top talent to roles unless they pay competitively. To gauge an appropriate figure, businesses can take advantage of empirical data on what is on offer in their industry and geography. For example, Xactly Insights provides anonymised statistics on both the salaries and bonuses offered in organisations of different sizes, sectors and locations. This enables businesses to ensure that they’re offering packages in line with their rivals, and provides a sense of scale for the range of salaries to offer to candidates depending on their experience.
How do you ultimately maximise productivity?
However, there is a distinction between people’s salaries and bonuses, as psychologist Frederick Herzberg argued. Roy Hodgson’s large salary didn’t in itself appear to act as a motivational tool on an ongoing basis. Salaries are a maintaining factor, which get people to work every day. Bonuses are what motivate them to be engaged and productive. Recent Xactly research in determined that, for over a quarter of UK employees, a financial bonus is their main motivator, yet a large portion of employers do not run any kind of monetary incentivisation programme.
To maximise their productivity and success, businesses must look to implement smart financial reward schemes. This involves identifying the steps a business needs to address to be successful, deciding on corporate metrics that are measurable for each individual and then applying technology that automatically measures and assigns compensation based on execution of these goals. Tailoring individuals’ targets and bonuses to the overarching company strategy will ultimately generate better results, while improving engagement and satisfaction.
Businesses face a balancing act when determining the compensation packages that will ensure they not only get the best performers, but keep them engaged. The best approach is to both benchmark salaries against industry expectations, and then to incorporate a smart, performance-related element. And businesses must take advantage of the latest tools and data throughout this process. That way, organisations everywhere, including the FA, can successfully drive their teams to success.