RedBalloon Founder says Google US $233m wage spend short sighted

The founder of RedBalloon.com.au has dismissed Google’s recently announced global 10% pay rise as a “short-term tactic that won’t prevent the Facebook brain-drain.”

Naomi Simson, who delivered powerful employee reward and retention when she founded RedBalloon ten years ago, says the Google global pay rise won’t have the long-term effects its CEO Eric Schmidt is hoping for.

“It’s a short-term fix – the employee feel-good generated by a 10% pay rise and shifting of annual bonuses into pay checks will only last as long as it takes for the extra cash to be swallowed by the mortgage or credit card. It’s widely-documented that cash rewards don’t inspire employee loyalty,” says Simson.

She points to recent research by RedBalloon, including its Dream Employer survey, which found culture was more important than pay in retaining people:

“Although pay benefits and conditions rate highly, studies on non-monetary incentives show them as having a higher-perceived value than cash, being 24% more powerful at boosting performance than cash incentives1,” said Simson.

“Look at the research documented by Daniel Pink in his book Drive – he specifically outlines the short term ‘high’ of cash rewards causes long term disincentive. Keeping people engaged is not about their pay packet – if you pay people fairly, of much greater importance is their autonomy, mastery (what they learn) and also their sense of purpose.” 

Simson says that if Googlers think they are going to learn more, have greater flexibility and clearly see the impact of their work over at Facebook, then they will continue to leave, despite cash bonuses.

“RedBalloon clients, such as Qantas, Westpac and Telstra report their employees want time to spend with those people important to them, sharing experiences. Long-term, people remember a V8 race day or cooking class with friends much more than cash.” says Simson.

Ironically, Simson reports clients who have shared stories of highly-paid employees who rarely notice when the extra cash bonus is paid into their bank accounts.

“Loyalty is never about the money. I recommend Eric Schmidt invest in experience-based rewards and recognition over the cash incentives. Notice people, love them, value their contribution and make them heroes – make their dreams come true and they will be with you forever – and will also give you their valuable discretionary effort.”

Further Information

Matt Geraghty, Head of Corporate

RedBalloon

matt@redballoon.com.au

02 8755 0001 or 0432 993 125

http://www.redballoon.com.au/corporate

 

For interviews with Naomi Simson, please contact Philippa Lowe on 0414711107 or philippa@redballoon.com.au

For accompanying images of Naomi Simson, there is a selection at http://www.redballoon.com.au/corporate/team/naomi-gallery

 

About RedBalloon Corporate

RedBalloon Corporate delivers fun, innovative, experience-based recognition programs. Services include Online Points Programs, Voucher Programs, Team building events and Corporate Gifts, all which assist businesses shape a culture where employees are as happy and as valued as customers. RedBalloon programs ensure organisations ‘notice’ what their employees do and encourage a deeper level of employee engagement. Forming an attachment (emotional and rational) between people and the brand is one way that we help produce a happier workforce and in turn a stronger economy.

Date: 12/11/2010