effectiveness key indicator. The practical effects of commitment over performance,
however, are not widely acknowledged and recognized. Different opinions and points of
view on the alleged existence of a link between commitment and performance have been
actually expressed over time. A number of Authors do recognise this link and the
contribution of commitment to performance (Walton, 1985; Iles, Mabey and Robertson,
1990; Guest, 1998; Marchington and Zagelmeyer, 2005), whereas others (Meyer and
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Allen, 1997) highlight the lack of empirical evidence in support of this supposed existing
direct cause-effect relationship.
Some Authors also attribute to commitment far-sighted qualities. Dordevic (2004), for
instance, considers commitment as a revealing indicator, insofar as enabling employers
to predict individual behaviour, performance and absenteeism predisposition. Coopey
and Hartley (1991) on the other hand, who seem to mostly associate commitment with
obedience and loyalty in the extreme, insofar as individuals becoming complaisant,
uninvolved and submissive, even suggest that commitment, reducing flexibility and
inhibiting creative problem solving, could jeopardise organizational performance.
Torrington et al (2008) make a distinction between the concept of commitment intended
as identification with the business, which is referred to as “attitudinal commitment”, and
commitment intended as a type of conduct most markedly associated with staying with
an organization and continue to pursue its aims, which is more commonly referred to as
“behavioural commitment.”
As discussed above, the definitions of commitment formulated by some Authors are
actually fairly akin to the definitions of engagement provided by others. In order to
better characterize the idea of commitment and associate with it a distinctive meaning, it
could be more strictly linked to the concept of individual loyalty to employers. As
suggested by Armstrong (2009), the concept of employee commitment, which should be
moulded during the development of a HRM philosophy, should be more appropriately
associated with the concept of organizational citizenship. As such, commitment is what
makes an individual proud of working for a particular organization and developing a
strong sense of belonging. This is also the conclusion reached by Porter et al (1974),
who suggest that commitment relates to the degree of an individual identification with,
and involvement in, a particular business.
The effects of rewards and benefits
In the light of the definitions provided above, it can be finally made the attempt to find
out whether the rewards and benefits included in employee reward packages can
actually help employers to keep their staff engaged, motivated and committed.
Reward and benefits and motivation
The findings of the CIPD (2011) and National Training Award (2010) investigations
mentioned above can help to deal with the conundrum. Both studies revealed that
individuals place great emphasis on financial reward when looking for a new job so that,
in the event an individual should receive several job offers whose content is similar, it is
very likely that this will opt for the one associated with the largest reward package.
Financial reward would clearly be in this case the “motive” for an individual accepting a
new job offer, or rather, the motive to decide amongst a number of job offers which one
to accept.
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It clearly emerges by extension that reward can help employers to attract individuals,
but can actually reward be considered as an effective means in order to motivate
employees in the workplace?
Considering the definition of motivation, it clearly appears that individuals behave and
act in a particular way to achieve a result, that is, an objective they consider valuable. In
this case discretionary behaviour does not represent an end of itself, but a means to a
well pre-identified end: reward. Considered as such tangible rewards and benefits can be
regarded as motivators, individuals could be likely to make extra efforts and perform
better in order to achieve the intended result: a bonus, a valued benefit, a salary
increase and so forth (Longo, 2011). Indeed, Herzberg (1968) did not exclude the
existence of a direct positive linkage between cash awards and motivation whether
financial rewards are provided to individuals as a means of recognition for their
attainments rather than as “across-the-board wage increases.”
On the basis of these elements, financial rewards can be considered as effective
motivators in the short run, more specifically for the period of time necessary to an
individual to attain his/her immediate end. On the other hand it is unlikely that
employers could be able to motivate employees in the mid- and long-term just relying
on financial rewards. In this case, they should constantly put in front of their staff carrot
and stick, which may not necessarily be a big issue of its own, but for the fact that this
method would very shortly reveal to be extremely expensive and as such unsustainable
over time (Longo, 2011).
Financial rewards can potentially enable businesses to practically achieve motivating
results, but only in the short run. This method can be hence effectually used for specific
circumstances and for the attainment of specific aims; for instance, in those cases in
which employers have to confirm particularly sensitive and delicate assignments to their
best employees. Some of them could also feel motivated by the fact that they have been
recognised by the employer, amongst all of the other employees, as the most suitable
individuals to carry out the assignment and as capable to produce the expected and
desired results. This is indeed the case of intangible reward, but some other individuals
could mostly feel motivated by tangible rewards. In general, it is very likely that a mix of
intangible and tangible rewards would produce the best results.
Absolutely minimising the effects and importance of financial reward, however, would be
a massive blunder, and not only during periods characterised by a predominantly grim
economic exogenous context. Financial rewards are never likely to be completely
irrelevant; as suggested by Herzberg’s two-factor theory (1957), albeit financial reward
is not a motivator of its own, an inadequate and insufficient financial reward package
could actually produce remarkable counterproductive effects upon individuals, whose
consequences can potentially be considerably detrimental for the business.
Reward and benefits and engagement
It could be argued that considering engagement according to the US Conference Board’s
and the British IES’ (Robinson et al, 2004) definitions, benefits or strategic benefits (how
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referred to by Hemsley, 2011) can turn to be useful to retain individuals or to keep them
committed to an organization, safe in the knowledge that committed individuals are not
necessarily engaged individuals. This approach can however be considered questionable
in that whether an individual has decided to leave the current employer and has started
to look for another job, it can be hardly believed that such a decision may have totally
been caused by the weakness of the reward package the individual receives. The only
exception to this possibility being represented by the fact that the organization is
offering overall financial reward packages completely unaligned with the local labour
market rates. In practice, however, such decisions are habitually made on completely
different grounds (Longo, 2011).
Considering engagement as linked to the job, it can be concluded that reward is mainly
inwardly generated by individuals. As far as engagement is directly connected and
concerned with the job, it clearly relates to the intangible aspect of reward. In this case
discretionary behaviour does not represent a means to an end (which would be reward),
but the end itself. In other words, discretionary efforts and going the extra mile are not
directed towards the attainment of a tangible reward. Reward is in this case represented
by the satisfaction provided to individuals by the job performed and by the results
delivered by their actions. More than a matter of reward it actually is a matter of self-
fulfilment. Individuals feel satisfied by their actions and by the results delivered by their
activities (Longo, 2011). As such, engagement can be exerted by means of job design,
job enrichment, employee involvement and employee empowerment practices,
delegating decision making and, in general, by means of all of those activities actually
favouring individual personal and professional growth. Providing individuals with learning,
training and development opportunities should clearly represent a steady part of the
process.
Whether individuals in order to perform well want a job giving them a feeling of
usefulness, autonomy, involvement and growth, it is very unlikely that they will be
inspired to perform well just because of the financial reward package they receive. After
a while, for generous the reward package may be, it will be considered by employees as
something absolutely normal, taken as axiomatic and deserved irrespective of their level
of performance and what they actually deliver (Longo, 2011).
Reward and benefits and commitment
As discussed earlier in this paragraph, it can be actually accepted the idea that benefits
and reward can help employers to retain staff. Taking for granted that individuals when
looking for a new job only care about financial reward, it would really make no sense
leaving the current employer for a new one offering a reward package similar to that
they already receive. In such a situation individuals would very likely opt to better stay
with the current employer.
Moreover, employees already know how things go in their current organization, which
could sometimes be just the reason for wanting to leave, but they would possibly know
little or nothing about how things would go once having eventually joined a new
organization; things might also go worse. This accounts for actually being in general
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unlikely that an individual might leave an organization for joining a different one just on
financial-related grounds.
It could not be therefore excluded a priori that benefits packages could actually reveal to
be useful to retain individuals, but it clearly depends on the different circumstances so
that the effectiveness of benefits packages as an exclusive means to retain staff remains
at large questionable (Longo, 2011). Whether, for example, individuals should find it
hard continuing to stay with the current company by reason of the organizational climate
or should feel the relationship with their manager as being irreversibly prejudiced, there
would clearly be no benefit package which could mend such a deep wound. Financial
rewards can help, but cannot repair the irreparable.
Vice versa, as confirmed by the CIPD and the National Training Awards investigations,
benefits packages can definitely reveal to be very useful for businesses wanting to
attract new talents. Albeit it must be recognized that the circumstance a reward package
revealing to be useful to attract individuals from the exogenous context could produce
limited effects in order to retain existing employees could apparently appear to be rather
eerie. This actually depends on all the other non-reward-related different circumstances.
Since committed individuals are not necessarily engaged or motivated, employers
wanting to induce staff commitment should take extra care with the determination of the
budget they are eventually forecasting to devote to the achievement of this particular
aim. It could produce no financial return at all.
Individual commitment is normally associated with the sense of belonging and
organizational citizenship. Committed employees are likely to be proud to work for a
particular organization; employers should by extension try to achieve this objective
directing their efforts toward the design and development of employer branding
strategies, which will surely reveal to also be sorely effective in order to attract
individuals from the external environment.
CSR initiatives, flexible working practices and the introduction of similar initiatives can
also help employers to achieve this objective. An individual could be definitely proud of
working for an organization which also pay a good deal of attention to the environment,
supports charities and endorses eco-friendly activities.
Amongst the most important elements and characteristics at the basis of employee
commitment have to be definitely included consistency and integrity. Individuals are
very sensitive to what employers communicate and endorse in the form of rhetoric and
what they deliver in practice. This is actually the aspect to which individuals are paying
the more and more attention; employers need to definitely avert to talk the talk, but not
to walk the walk.
Being proud to be part of an organization for an individual very much depends on these
factors and believing that an employee could feel proud to work for a particular employer
just for the financial reward packages it offers would represent a massive blunder.
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Individual motivation, engagement and commitment cannot be bought; at least, not for
a long period of time.
The influence of the external environment
The reason for job-seekers preference shifting from “increase job satisfaction” to
“increase salary/benefits”, as showed by the findings of the CIPD investigation (CIPD,
2011), has very likely been remarkably affected by the deterioration of employees’
standard of living. In fact, the same study suggests that only 7 per cent of panellists
reported that their standard of living had actually improved, whereas 56 per cent said
that it remained the same and 36 per cent reported a worsening situation.
The adverse conditions characterizing the financial external context can clearly produce a
negative impact on the mood of individuals and sometimes, even though inadvertently,
these could bring their personal problems and feelings with them to their workplace. This,
of course, could in turn affect their level of performance; in such circumstances, the
employer support could definitely help. Since employees are prone to forget, in the long
term, what an employer has done for them and to keep, by contrast, long-term memory
of any even tiny accident, such a help should be considered within the array of the
initiatives producing short term effects (Longo, 2011). It is however likely that the
support received by individuals in periods when these are experiencing particularly
painful hardships will be remembered for a longer spell, producing as such longer-term
benefits. Problems may however arise from the budgeting side, during downturn periods,
for instance, it is unlikely that employers could afford extra-budget expenses, but this
clearly depends on the circumstances. Notwithstanding, employers should by no means
neglect the importance that such forms of support could represent for individuals and
should hence think carefully before renouncing to implement them.
Still considering the findings of the CIPD study, it must also be pointed out that despite
“increase salary/benefits” has been reported, with 54 per cent of preferences, as the
main motivation for individuals wanting to change their job, “increase job satisfaction”,
with 42 per cent, “opportunities to learn new things”, with 30 per cent and “opportunities
for promotion”, with 24 per cent, altogether definitely represents a remarkable score in
favour of intangible and non-financial-related reasons for individuals wanting to change
their job (CIPD’s survey respondents could answer ticking more than one option). The
change at the top of the table did essentially represent the tip of the iceberg and did not
really represent the overall result of the investigation, which still recognised a good deal
of importance to the intangible side of reward.
Motivated, engaged and committed employees would clearly perform much better than
people who are only motivated or only engaged or only committed. The combination of
the three factors would actually produce an ideal synergetic, multiplicative effect typical
of the “bundle” approach, which is indeed very tricky to achieve in practice.
Benefits and salary, as part of a total reward model where the different components of
financial and non-financial reward play a coordinate role to implement an organization’s
reward philosophy and strategy, can clearly reveal to be important contributors to
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employees’ engagement, commitment and motivation. To motivate, engage and commit
staff it is however necessary offering individuals a combination of learning and
development opportunities, an appropriate working environment and coherent pay and
benefits packages, in other words a consistent, well-developed, well-designed and well-
executed total reward programme (Longo, 2011).
Advantages and disadvantages of variable pay and incentives
Whereas base pay is essentially provided by employers to individuals regardless of their
real contribution and performance, variable pay, which can be either granted to
individuals or teams for the results these have directly produced or according to the
overall organizational performance, linking financial rewards to those factors which are
valued the most by employers, can practically enable these to encourage the desired
behaviour and performance level within the business.
Nowadays, performance-related, competency-related, contribution-related and skill-
related pay represent the contingent pay methods most extensively used by private-
sector employers; whereas service-related pay, which being linked to the length of
service can be extensively considered as a form of contingent pay too in that contingent
upon service, is still mainly used in some public and voluntary sector organizations.
Bonus plans on the other hand are rather widely used by both private and public sector
organizations. Indeed, whether recently many public-sector employers have recourse to
variable pay programmes in order to link pay to individual performance and contribution,
it is much less likely that private-sector employers may use service-related pay schemes
(Longo, 2011).
When a variable pay scheme is used, pay is essentially formed by two components: a
fixed element that is base pay and an additional variable component which varies from
individual to individual. Whereas base pay is usually associated with the relevant grade
of the organization pay structure, the variable element is differently determined
according to the individual level of expertise, contribution and performance. This
component can also be provided to individuals in the form of one or more lump sums
usually called cash bonuses.
Contingent pay can also be consolidated into base pay becoming thus an ordinary
component of pay and losing its typical feature of “pay at risk” or pay which needs to be
re-earned. By contrast, this feature is clearly maintained when the variable component
of pay is provided in the form of lump sums. In this case, whether an individual
performance should deteriorate in the following year(s), the cash addition will be
removed causing the employee overall pay to decrease accordingly (Longo, 2011). It is
important to duly consider that, used in this way, variable pay would become less prone
to be considered as a fixed component of a reward package before a court. The
circumstance an individual may or may not receive this component of financial reward
from one year to the other and that in any case it would be subject to a variation in its
amount determination, will contribute to prove that an individual cannot necessarily
create expectations of receiving this element of pay.
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As a rule of thumb, variable pay should be consolidated into base pay only to recognize
individual sustained, outstanding performance over a period of at least two, three
successive years. Also in this case, however, a portion of the individuals’ total pay should
better remain connected with their performance; this will certainly reveal to be useful for
employers and gratifying for the individuals concerned.
Employers will be able to keep alive individual interest in performance and contribution,
whereas individuals would continue to maintain a clear line of sight between their
financial reward and their level of performance and contribution. The portion of variable
pay could be thus considered somewhat of a post-it or a memo attached to the best
performers salary slip reminding them that their employers still count on their support
and that sustained performance and outstanding contribution are still features these
value and are expected from them. At the end of each calendar year it essentially
changes nothing in the individuals overall income, but in this way employees would
constantly have evidence that their performance and contribution, being recognized with
a cash addition, are still appreciated and valued by their employer.
Even putting aside the motivating role potentially played by variable pay, it is likely that
individuals at large may behave differently according to the circumstance that a
component of their salary is variable or otherwise. The fact that the sum which has been
received for a two- or three-year period time as a variable component of pay would be
subsequently consolidated into fixed pay, could arguably represent a cause for individual
zeal to decay. Unless some other reasons would exert a certain influence over the
individuals’ commitment, after a certain period of time these may feel in fact less
inspired to go the extra mile (Longo, 2011).
Findings of a survey carried out amongst more than 500 employers in the US by Aon
Hewitt (Aon Hewitt, 2010), revealed that, downturn notwithstanding, employers had
invested in variable pay during the previous thre