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March 21, 2010
The Relationship between Incentive Pay, Employee Engagement and Productivity

In a BLR webinar entitled ‘Incentive Pay: Best Practices for Designing and Managing Pay-for-Performance Plans’, Dan Kleinman explains that lack of engagement among employees equals lost productivity and lost profits. One answer to this challenge is the use of incentives to engage your employees.

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A recent study by the human capital services firm Towers Perrin found that ‘employee engagement has a direct impact on retaining employees’ and that employers must find ways to do more to inspire their workforces by recognizing their workers’ value. The study results are provided below:

  • Half of the employees responding in the study who described themselves as ‘engaged’ said they had no plans to leave their organizations (compared to 15 percent of the group who described themselves as ‘disengaged’ and about a third of the general workforce)
  • Fewer than 5 percent of the engaged workers reported that they were actively seeking other jobs, compared to more than 25 percent of the disengaged workers.

Dan Kleinman is the principal of Dan Kleinman Consulting, a California-based compensation and human resource consulting firm. For the past 18 years, he has served as an independent consultant for a broad spectrum of regional, national, and international companies, providing compensation, performance, organizational planning, and reward-system design services. He can be reached at

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