I always tell my clients that pay is a satisfier, not a driver of workforce engagement.  Based on all of the available evidence, and the strong opinions of yours truly, you have to pay ”fairly” or you won’t get applicants to go through your recruiting process.  Pay employees too much and you’ll create a Reluctant Workforce; reluctant to leave and reluctant to work hard.

According to January 2008 pay scales, some DC federal employees have hit the top of their pay band. In 2007, less than 1000 employees nationwide had hit the top of the pay cap.  this year, it’s more than six times as many. Now these folks aren’t paupers, their salary tops out at about $150k.  It may be one of the reasons that federal government employees feel significantly more positively than any other industry about their pay as it compares to employees with similar jobs at other companies.

However, when your retention strategy has to do with providing increases in pay and advancement in grades until retirement, what do you do when you lose half of that equation, and the other half doesn’t matter anymore?

According to the last national benchmark study my company conducted, federal workers are most influenced by the following:

• Daily Satisfaction

• Ethics, Diversity, & Safety

In case you’re wondering, Daily Satisfaction is defined as “the managers’ and supervisors’ ability to recognize what motivates employees to come to work daily, ensure working relationships are positive, allow for autonomy and discretion in job performance, show respect to employees, and maintain a high-performance, enjoyable workplace.”

Ethics, Diversity, & Safety involves the ability of “the organizational leaders to create a culture of ethical conduct and decision-making, comply with laws and policies, respect and manage diversity and ensure a safe and productive work environment.”

Nothin’ about pay in either of those two definitions.  Must be nice to know that one-third of your current employees will retire in five years, another one-third in ten years, and nearly one-third in 15.  Retention is a dual-edged sword.  It really hurts when it cuts the other way.