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Tying Purpose-Based Goals to Financial Rewards

Tying Purpose-Based Goals to Financial Rewards

The world is always changing—for better or for worse. One of the changes that many will consider a net benefit is the general shift in workforces demanding more from their employers. While this isn’t going to be immediately apparent or possible at every firm, it’s something that needs to be addressed in some form everywhere—even if it’s not accretive to the bottom line right away. 

Why do enterprises need to take extra care in building a purpose-based corporate culture today? Because it’s overwhelmingly the top priority of individuals in younger working generations—such as Millennials and Gen Z. Members of these groups demand more of their employers than those from the past. Organizations that don’t adequately meet their expectations will have a difficult time attracting top young talent and staying competitive. 

What’s important to note here is the desire for a purpose-driven workplace is more essential to these individuals than more typical perks such as higher pay. Striking the balance between corporate culture and financial rewards will bring out the best people looking for a job.

Why Is Tying Financial Rewards to Purpose-Based Goals a Good Idea?

There are many ways organizations can go about doing a better job of creating a purpose-based corporate culture. While there are some obvious moves that fall under the environmental, social and corporate governance (ESG) umbrella, such as moving toward renewables or closing gender pay gaps, there are other solutions that are a bit less straightforward. 

One option is to reimagine how executive compensation is tied to various purpose-based goals of the organization. Creating an executive rewards program tied to performance metrics isn’t something new. The only difference here is that certain executive compensation elements are determined by ESG initiatives as opposed to sales or other metrics. 

While this might not seem obvious to everyone at first, this has huge value to enterprises. As already mentioned, many of the workers today want a conscientious corporate culture to be the top priority. Aligning pay structures with the ability to meet goals, instead of just declaring them, will rally teams to work harder when they see the program’s successes.

This sort of purpose-driven attitude should also be present in the way an organization works with its customers. Regardless of whether it’s B2B or B2C, relationships with the people served by a business should be considered another key determinant of success. 

One Gallup poll showed just “27 percent of employees strongly agree that their organization always delivers on the promises it makes to customers.” Executive compensation stats can potentially be tied to performance on consumer-facing reviews, which are increasingly becoming an essential element to success in today’s interconnected world.  

That poll found another interesting statistic, which can be interpreted in more than one way: “four in 10 employees strongly agree that the mission or purpose of their organization makes them feel their job is important.”

On one hand, this means most organizations aren’t meeting their employees’ expectations when it comes to corporate purpose. But at the same time, forty percent had strongly felt those positive things. So, while there’s certainly room for improvement everywhere, it’s great to see a decent number of enterprises really are clearing the bar. 

As already mentioned, appealing to employees based on purpose and not just financial incentives is a powerful way to attract top industry talent. When your organization is aligned with the values of the people you want working there, it creates a powerful sense of purpose and momentum that spills over into all aspects of operations. 

When deciding how to implement purpose-based rewards, the process can be done through internal, external, or hybrid channels. The benefit of hiring an outside firm for at least some of the planning work is the breadth of expertise in constructing equitable, achievable goals and plans. 

No matter how an organization goes about it, developing purpose-based financial rewards is a sure way to boost employee engagement, loyalty, and happiness. 

Business

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