What top employees want and what employers think staffers want often don't match, according to the fifth annual Strategic Rewards survey by Watson Wyatt ( The $600 million Washington, D.C. — based human resources consulting firm asked 410 North American companies and about 3,600 of their top performers to name the perks most likely to keep valued people loyal.

The answers, according to Watson Wyatt's Rick Beal, division practice leader for strategic rewards and an architect of the study, show a disconnect. “There is a fairly significant gap between what employers think is important for attracting high-performing employees and what those employees think,” he says. “Financial reward is not the number-one motivator. These people are more motivated by things that help enrich their career; opportunities to show what they can do and be perceived as successful in the eyes of their peers.”

Among non-monetary rewards, the three most prized were advancement opportunities, flexible schedules, and the opportunity to learn new skills.

“One of the things we've looked at for years is the perception of whether performance or merit pay works. Companies usually say they are tired of differentiating performance and don't think it's effective,” say Beal. “But employees say, ‘Yes, performance rewards work for me.’”

Which isn't to say that monetary rewards aren't part of an effective motivation package. “This isn't an either/or situation,” says David Hosrichter, partner and Midwest leader for Unifi, the Atlanta-based human resources division of Pricewaterhouse-Coopers. Unifi recently surveyed top dot-com employees and found a preference for a balanced compensation package. “High performers don't just want money, learning opportunities, or whatever. The truth is, they want it all,” Hosrichter says.

“High perfomers don't just want money, learning opportunities, or whatever. The truth is, they want it all.”

More companies are in fact implementing performance-based programs that include monetary and non-monetary rewards, according to the Watson Wyatt study. Of those surveyed, 48 percent offer performance-based stock options and stock grants, 35 percent offer group incentives, and 29 percent offer project incentives.

However, only 24 percent of the respondents said that they view rewards as a way to improve performance. This is a mistake, says Beal. “Notwithstanding the current slowdown, the tight labor market demands that employers be more aggressive and creative with their rewards programs if they want to win the war for talent.”