It might seem obvious to both employees and employers that increasing financial compensation will naturally lead to employees being happier and more committed to their jobs. We all like to earn money, and money can definitely contribute to comfort and satisfaction, but does it actually increase job satisfaction? As a Toronto recruiting agency, we deal with compensation issues every day and getting it right is extremely important for ensuring goal alignment between employee and employer, and for obtaining maximum effect from a very significant budget item.
A study by the National Academy of Sciences shows there’s no increase in happiness once you surpass a salary of $75,000 a year, meaning that earning anything above $75k won’t make you that much happier. While a better salary does mean a more comfortable living – bills get paid, kids can be in extracurricular activities, etc. — it doesn’t actually mean people will be emotionally happier. Yes, your actual needs are met but the emotional needs of employees are much more complex.
So, what do you do if you have unhappy employees who are already earning a decent wage? Do you throw more money at the problem and hope they like their job more? The answer is …. not necessarily.
More to Job Satisfaction than Money
While commissions, bonuses, and raises do incentivize employees, research shows that eventually, these incentives lose their magic once money isn’t so necessary. As an employer, you have to think of other types of compensation that make people happy: learning, being challenged, feeling respected, feeling productive, creating things, being a part of a team, being recognized – all things we enjoy as human beings.
There are many ways you can reward employees and retain top talent other than bumping up salaries. For example, can you move a high performer into a team lead position? Can you take a group of creative strategists and put them on a special project where they can impact company-wide change? Can you give an employee some much needed time off? Often times, the answer to employee happiness varies and it’s up to you as a leader to figure out what your employees value and what type of compensation is right for them.
According to a study by Qualtrics on millennials and what job perks they would value over salary compensation, 77% said they’d take a pay cut for long-term job security, 76% said they’d take a pay cut for flexible work hours, and 67% said they’d take a pay cut for a place that offered good mentorship opportunities. This goes to show you that learning and development, as well as job security and feeling valued, rates so much higher on the job satisfaction scale than monetary compensation.
Liking the Work Means More than Financial Compensation
If the work environment is poor, then there’s no amount of monetary compensation you’ll be able to pay employees to stick around. People want to enjoy coming into work every day—it’s that simple. People want to be interested in the work they do, they want to be utilized in a way that makes them feel valued, and they want to work on a team that’s positive and enjoyable. While no job is perfect, it should still hit most of these marks in order to make an employee stay for the long term.
If you notice an employee’s job performance is struggling, talk to them and find out what is really going on. Listening to your employees will bring a lot more value than simply passing out a yearly bonus at the end of the year.
Ask Your Employees What They Value
A more cost-efficient and generally effective way of increasing job satisfaction can begin by simply asking your employees what they value most. Sending out an anonymous survey (free on Survey Monkey) to ask simple questions can enable you to gain great insights. Some examples:
- Are you satisfied with your salary?
- What job perks do you wish we had more of?
- What makes you feel satisfied coming to work every day?
- If you could change something about your job, what would it be?
Many companies send out workplace surveys, and they can give you very valuable insights to employee happiness and enable you to manage change. If this is something you think would be beneficial, think it over and plan accordingly – a good survey is integral to this process.
Finding out what employees actually want in order to be more satisfied in their job will save your company money in the long term, as you can focus the budget and money spent on things that are actually meaningful to your employees.
Financial Rewards for the Right People
As Toronto-based head hunters, we know that it’s important to identify which employees value which type of rewards. For example, someone in Sales might be much more motivated by a financial incentive than someone working on the administrative or creative side of things. You want to identify the right departments in your company that work well with financial incentives and tailor the incentives for each department fairly and appropriately. Give careful consideration as to whether compensation should be individually based or team based.
The best win-win solution is to have a mix of both. Use money to remain competitive in the marketplace and to guide the type of results that you are looking for. Remember that a lot of job satisfaction comes from emotions, rather than physical needs being fulfilled. A targeted approach to rewards will benefit your company much more than “one size fits all”.
Kathbern Management is a Toronto-based recruiting firm focused on working with organizations who are seeking to find and hire the key people who are critical for their success.
Contact us today for a free consultation about your key person search.