What matters more to your workforce than money
Economists have long argued that money doesn’t buy happiness. But compensation is still a major factor for us when we’re considering where to work. What do we know about how more pay influences employees’ motivations?
That slice of information can be the difference between a workforce that is satisfied and productive and one that isn’t — costing the business money in the long run.
MONEY CAN’T BUY HAPPINESS
At Glassdoor we have a unique window into the labor market, as we use reviews and salary surveys to gather insights about companies and employee sentiment. The result is a wealth of real-world data, allowing us to identify the factors beyond pay that really drive happiness at work.
One of the most striking results we’ve found is that across all income levels, the top predictor of workplace satisfaction is not pay: It is the culture and values of the organization, followed closely by the quality of senior leadership and the career opportunities at the company. Among the six workplace factors we examined, compensation and benefits were consistently rated among the least important factors of workplace happiness.
HIGHER-EARNING EMPLOYEES HAVE DIFFERENT PRIORITIES
Although money isn’t a major driver of employee satisfaction, a person’s workplace priorities do change as their income rises. Our data suggest that higher earners are more likely to want their employers to share their values and create a positive company image.
Other factors the importance of which rises with compensation include the quality of senior leadership and the importance of career opportunities. At higher pay levels, workers clearly
By contrast, work-life balance declines in importance at higher income levels, and high earners are more willing to give up leisure time for work income.
FOCUS ON CULTURE WITHOUT COMPROMISING PAY
Although pay is not the most important driver of employee satisfaction, these results don’t suggest that employers can disregard it. Compensation and benefits may have less predictive power for employee satisfaction than the other factors, but it is still the top factor that job seekers consider when evaluating potential employers — particularly for job seekers weighing competing offers. To attract talent, offering competitive pay and benefits remains critical for employers.
However, once employers have begun offering pay that’s within the range of competing firms, what’s the next step for improving employee morale, engagement and productivity? Our research suggests that further tinkering with the compensation package is not likely to improve employee satisfaction much, particularly among higher-earning employees.
While pay can help get new talent in the door, our research shows it’s not likely to keep them there without real investments in workplace culture: making a commitment to positive culture and values, improving the quality of senior management and creating career pathways that elevate workers through a career arc in the organization.
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