Elements of reward that boost employee commitment - such as career development and performance-related pay - have a bigger impact on an organisation's bottom line than increasing basic salary.
A survey of 2,800 staff and 221 employers by consultancy Watson Wyatt, revealed that employee commitment is the key people factor improving financial performance and customer service.
It also shows that, when it comes to boosting commitment, the most effective reward packages focus on career development and promotion opportunities, increased flexibility and a pay-for-performance culture.
Similarly, money is not the key to retention, the survey shows, highlighting that when leaving an organisation, employees place more importance on career opportunities and job fulfilment than on pay increases or benefits.
Nevertheless, warned Eddie Hogbart, head of total reward at Watson Wyatt, organisations cannot completely ignore pay and incentives when devising reward packages.
"The elements of reward that have the strongest influence on employee behaviours are intrinsic rather than the traditional financial components," he said. "How-ever, they only successfully support employee commitment levels, satisfaction and turnover if they are underpinned by a reasonably competitive financial package."
There are a number of hurdles to navigate when devising total reward packages, such as accesssing accurate market data and truly understanding what the employee wants, but the potential value to the business, if done well, can be significant, said Hogbart.