The social changes promoted to a large extent by the new generations added to an adverse economic situation, have caused organizations to modify many of the labor policies which up to now they have been ingrained. In this sense, in recent years some hitherto unknown terms have appeared that have been making their way into the vocabulary of large, small and medium-sized companies with the aim of alleviating an increasingly high job turnover.
The first edition of “Report on job rotation in Spain”carried out by Randstad, has determined that, despite the increase that the country has experienced in permanent contracts in recent years, job turnover continues unabated, reaching an annual level of 17%. A figure that shows that not only attracting talent is becoming more and more complicated, but also managing to retain it over time.
One of the so-called terms that have gained prominence is flexible compensation. It is essential to pay attention to the numerous emotional benefits that this causes. From the psychological point of view, the worker perceives it as a personalized and special attention that gives them the possibility of choosing what they want in their remuneration, something especially valued by the young generations. In psychology, in fact, it is well known the Illusion Of Choice Bias, Referring to the fact that when people think that we are making a choice and have control, as in these cases, we feel more committed and satisfied with the decision made.
Flexible pay and salary
It is very important to understand that, however, people are governed by a priority of needs, something well known as the Maslow Pyramid of needs, which structures the needs of people in a certain order. Satisfying higher needs makes sense when lower needs are met.
In other words, no matter how many flexible remuneration benefits are offered, if the salary is not perceived as equitable, these will not serve as a motivating factor and, therefore, will have no influence on the retention of people. Flexible remuneration is valued to the extent that it is an extra addition to salary.
It is known to all that salary increase has a motivating effect only for three months, after which one gets used to the increase in compensation and ceases to be motivating. Other aspects that better cover the most superior needs make up for this lack of extrinsic motivation, hence the interest of the elements included in the flexible remuneration, which act as continuous motivation factors.
Therefore, flexible remuneration makes sense when the salary is fair and the working conditions are stable. These are considered hygiene factors that have to be present for the work to have contractual value, but in themselves they are not motivating. Motivational factors, for their part, improve the perception of the balance between what the worker contributes to the company and what he receives from it.
In short, flexible remuneration makes sense when the the basic conditions of compensation amount and safety at work and acts as a personalization factor that is motivating in itself.
It is currently an important concept in people management due to the need to create a rewarding experience of the employee’s relationship with his company and, with this, retain talent, as well as being related to another of the key concepts today, welfare.
Isabel Aranda, Chief Content Officer of TherapyChat and member of the Governing Board of COP Madrid.
