Beyond Loyalty: The Role of Fair Pay in Sustaining Employee Engagement

By Darren Ashby

Given how fast everything moves nowadays, keeping your teams engaged and loyal has become incredibly difficult. This is especially true for long-standing employees. They know their way around the business and have spent lots of time building relationships to ensure what really matters gets done efficiently. They also hold the bulk of the corporate memory and knowledge of the business, and at their best demonstrate a wisdom and openness to change. However, there is an equal downside to each of these points. Long-standing employees at their worst can become internal, less curious, and less aware of how the world is changing. They can become reliant on the same old relationships, making a culture feel exclusive. And they can become resistant to change – a cynicism that stems from having ‘seen it all before’ – bringing with it personal baggage and resentments that build up over time.

The key to keeping your long-term employees engaged and committed is to make sure they still feel part of something ambitious that really matters to them. They need to care enough to have the difficult conversations about what is needed from them now, how they can get better at what they do and why the risk of personal change is worthwhile.

Below are a few things we’ve seen high-performance cultures focus on to make sure both long-term and new employees feel a sense of belonging that sustainably carries companies.

1. Become purpose-driven: Avoiding the 'better in the past' mindset requires cultivating a purpose that transcends superficial labels and binds teams together. Instead of fostering dynamics like unquestionable loyalty, it is important to shift your attention towards cultivating a shared mission that not only encourages genuine commitment but also promotes a sense of collective purpose and unity among your teams. By emphasising the value of a shared mission, we can create an environment where everyone feels motivated and enthusiastic about contributing their unique skills and talents towards the common goal, ultimately leading to greater success and fulfilment for the entire organisation.
2. Keep leaders in front: Leadership is pivotal. Research shows that employees who trust their leaders are 12x more likely to be fully engaged in a company’s work and mission. Leaders must create a supportive environment, listen actively, and be of use to their team members. They can rally teams, bringing out their full potential and unlocking their collective strength. How they show up and rally teams has such a profound multiplying effect – lean into it. Leaders are your gold standard.
3. Invest in feedback: Positive attention and constructive feedback are powerful tools for sustained engagement – especially with employees who might already know the ins and outs of a given company. Ensure recognition is frequent, specific, and meaningful around individuals' goals and strengths. Make it real. People need to feel their efforts make a difference towards a shared goal. Critically, the mistake I see so many leaders make is thinking that feedback must come only around performance reviews but in reality, every day is an opportunity to calibrate through small, thoughtful moments of clear communication. Take the chances when they come and celebrate achievements at every step of the journey, not just the finish line.

These higher order factors of purpose, leadership, culture, and learning are critical. However, we can’t forget that people work to earn a living and want to create wealth for themselves and their families. Is there anything more emotional in business than money?

In modern day leadership theory, pay is often underplayed as a driver of engagement, but of course perceptions of pay have a significant influence on employees’ discretionary effort. Pay is not just about the motivation to achieve performance goals but also about creating a genuine sense of mutuality with the long-term interests of the employer. Do I perceive my pay as fair given how the business is performing and do I believe that as we get more successful, I will be more successful? If I doubt the future success of the business or do not trust in the benevolence of my leaders as we get more successful, then that psychological contract will be broken. Despite their loyalty, research shows that employees that stay a long time within companies tend to be underpaid in their roles.

It's essential to keep conversations about pay clear and open. Engage in transparent communication about pay philosophy and its alignment with business success. Build trust in the psychological contract by ensuring that employees perceive fairness in their compensation. It’s also crucial to keep pay up to date. Keep abreast of what other companies are doing and saying – because, no matter what, your employees will be doing the same.

So, remember, pay is the floor of engagement, without this foundation, resentment will build and undermine your efforts. However, pay alone is not enough, your people need to feel part of something that is worth putting all their talent, experience and energy into. If you can create that environment then you will move from engagement to commitment, and from that unlock the kind of performance that makes a real difference.

Darren Ashby is the co-founder of purpose, strategy and culture consultancy businessfourzero and co-author of Every Team Actually Doing Business Better.

Darren Ashby

Co-founder of businessfourzero