Employee satisfaction: does pay prevail?

Employee satisfaction: Does pay prevail?

Need to know:

  • Money is an important foundation, but cultural changes have arguably created a world in which true engagement, happiness and satisfaction cannot be bought with pay alone.
  • Employees not only expect a broader package of benefits, but will also look to an organisation’s culture and impact on the world.
  • Recognition, transparency, flexibility and communication all combine with fair pay to create the ideal approach to employee satisfaction.

Money is often depicted as the core concern throughout employees’ personal and professional lives. However, a recent survey, commissioned by Indeed and published in May 2018, found that only 12% of British employees deem pay the most important factor in their jobs.

Instead, enjoying the job (24%) and having strong relationships with colleagues (21%) were cited as more prominent drivers of satisfaction.

Wellbeing, health, flexibility, working environments and the holistic employee experience are all common terms when considering a modern approach to bolstering satisfaction, but have these truly taken over from salary, or does pay prevail?

Changing environments

There are many factors that could have influenced a shift away from pay being a key motivator. These include the rise of technology, which allows increased flexible working and a focus on work-life balance, the entry of new generations with differing priorities into the working population, increased normalisation of career changes and greater awareness of the effects of the workplace on stress and mental ill-health.

These influences represent a seismic shift in how employers and employees view the working world, says Fiona Hornsby, managing director at Paydata. “Employers are realising that hierarchies and career progression models are all in flux, and employees are now much more empowered to make career changes and to challenge the way that [organisations] are doing things,” she states. “Some of the conventional hierarchies that have survived for a long time are being challenged by agile, non-hierarchical and self-managing organisations.”

This cultural shift has led to a change in the transactional nature of work, agrees Alex Moyle, author of Business development culture and managing director at Elevated Recruiting. In the old days, the two parts of the transaction were ‘you give me money, I give you time’. Now, [employers have] got to give money and development and [employees] will give [their] time and energy. It’s that discretionary effort,” he adds.

However, the world may not have changed so drastically. Tim Stoller, chief commercial officer and commercial director at The Happiness Index, explains: “[Pay] probably never was [as important as] we thought 20 years ago, but in the absence of any better insight into what motivated people then, we defaulted to saying it’s about pay. Because we have a much greater insight these days, we can prove that’s just not the case.”

Market minimums

Nevertheless, the reality is that pay will always have an important place at the benefits table. Employees will still have to pay living costs and save for the future. So, no matter how appealing a role or organisation is, there will be a level of remuneration at which it ceases to be attractive.

Gregg Lederman, author of Crave: You can enhance employee motivation in 10 minutes by Friday and chief executive officer at Brand Integrity, says: “Decades of research has proven that what really motivates us is not money. That said, [employers] have to pay people at least the market wage.”

Money as a foundation

Pay may, then, have become more of a building block than a key satisfaction driver.

There is a balance to be struck here, according to Moyle. “That’s where the jobs that are considered vocations are often not very [well] financially rewarded; the implicit thing is that [employees] feel good about what [they] do. But what is often found with teachers, doctors, nurses, is that it can only be pushed so far,” he explains.

Fiona McKee, head of human resources, UK and Ireland at SD Worx, agrees: “Pay is always going to be important to attract and retain talent; however, we’ve definitely seen a shift in that employees want opportunities to grow, and that job content is also very important.”

A symptom

If a job role or working environment is unpleasant or unrewarding, employees are likely to feel they are paid too little. A pay rise, although satisfying in the short-term, will not dispel these deeper issues.

Stoller adds: “Looking at employee engagement data and feedback from staff, quite often they’re going to [say] that they’re underpaid, but when we look at the correlation between pay and how motivated, engaged and happy people are, it’s quite weak.”

The reason that both employees and organisations focus on pay in these situations may come down to the simple fact that it is easier to articulate and work on than other elements of the employee experience.

“It’s very easy to focus on pay because it’s very specific, but it can be expensive to supposedly ‘fix’ if [employers] think [they have] got a pay problem; there’s a very short-term benefit to just paying people more,” says Stoller. “The benefits to engagement or happiness typically last about three months and then that flatlines. The more profound changes are harder to work on, so often employers say ‘let’s fix pay because it’s simple’.”

The total package

How can employers account for the fact that, even when pay appears to be important, improving it might not do the trick to motivate and engage staff? One approach could be to create an all-encompassing reward package.

Sharon Smith, sales and marketing director at Caboodle, says: “Employees are now more clued up as to the benefits and offers that are available in the marketplace and with employers. [Employers have] got to look at what their demographic is looking at. It’s not just a case of ‘there’s all these lovely shiny benefits, let’s just offer our employees everything’; it’s a case of looking at [an organisation’s] demographic and picking benefits that will suit that demographic to drive maximum engagement.”

Flexibility is the new normal

According to Work that keeps the UK working: how flexible working can help power 24-hour Britain in a post-Brexit age, published by workforce management organisation Quinyx in October 2018, 25% of UK employees would say no to an increase in salary if it meant forgoing flexibility at work. Just over a third (36%) would need at least a 31% increase in salary for forfeiting their flexibility.

Actually, when [employers] allow people more time in the day to go to the gym, for instance, [they are] much more likely to get a highly engaged employee all the way through the afternoon, rather than someone who is just waiting [for the end of the day],” adds Moyle.

Stoller adds: “[Employees] are starting to blur the boundaries between work and personal lives, and that means employers have to do that just as much.”

Recognition and value

Another key factor, and the most important one of all, according to Lederman, is the feeling of being valued in the workplace, which cannot be emulated fully through pay.

“[Employees] want a sense of purpose, a sense of accomplishment, to do meaningful work and feel respected for that work,” Lederman explains. “[Individuals] can start a fire without matches and lighter fluid, but it’s a hell of a lot more difficult. Recognition is the fuel. [Employers] can get great business results with just perks and benefits, but it costs a lot more and it’s way more difficult.”

This approach necessitates deep cultural change, developing new habits and making sure they become ingrained, to ensure that recognition becomes a fundamental element of the employee experience. It does not, however, have to be an insurmountable task.

“[Leaders can] stop for 10 minutes and share the success of someone living the values, demonstrating the experience, the operational excellence, doing something to benefit the organisation,” says Lederman. “Just taking the time to stop and let people know they’re doing a good job, but being specific as to what they’re doing and how it helps the business. It doesn’t just change culture, it transforms culture in a very positive way.”

Moyle adds: “Recognition doesn’t necessarily have to be driven by [a] manager, it can be driven by peers. That’s evidenced in the growth of peer-to-peer recognition programmes.”

Communication and transparency

The Compensation best practices report, published by Payscale in February 2018, found that 79% of employees feel they are paid unfairly.

Ensuring that employees feel they are well compensated, and are therefore more likely to be satisfied in their work, does not have to come with a pay rise, however.

Instead, a simple effort to provide open communication around pay is inherently tied in with having an open, supportive culture that will also work to foster satisfaction across other areas.

Chieu Cao, co-founder and chief marketing officer at Perkbox, says: “The notion of transparency is so important here: transparent management, transparent pay, equalising the power of the employee versus the power of the employer. It’s equalising the playing field of what employers can pay their staff and what employees should expect from their employers. Management in this country needs to understand the value of clear and effective communications.”

Pulse tools, such as that offered by SD Worx, can aid this approach. “Tools like this can help employers understand their key challenges,” McKee explains. “They can have two-way feedback and start building policies and processes on that.”

Culture is key

Ensuring that communication is open and employees feel valued are both integral parts of the wider approach to building a healthy, satisfying culture, in which employees are paid fairly, but rewarded in manifold other ways.

This cultural element also applies externally. Following the recession that began in 2008, for example, Moyle states that employee satisfaction has come to hinge more than ever on an organisation’s impact on the world.

“[Employers] can’t beg, bribe or coerce engagement,” says Lederman. “[They] have to create the conditions internally where people will tap into it.”

“They could be potentially paying slightly below market rate, but treat staff amazingly well and make sure they feel like they’re on top of the world, and they might not give up the job for anything,” agrees Cao. “Over time, [organisations] with the best cultures succeed over those [without].”