Job satisfaction and good management are far greater motivations than pay for employees, says UCL's Adrian Furnham
Money has great demotivational power. Pay has only the power to upset, never to promote engagement or satisfaction. It also comes way down the list of factors that make people happy at work. Few employees ever say job satisfaction is a function of their compensation package or that they are primarily in it for the money.
Satisfied employees talk about the importance of their contribution and using and enhancing their skills. They also talk about their friendships at work and the intrinsic interest in the tasks they perform, as well as being kept interested by the tasks they do.
On the other hand, the disenchanted, disengaged and dissatisfied are the first to vocalise their unhappiness about their pay. Manage people well and pay is less important. Treat them badly and they express their frustration, primarily by complaining about pay-related issues.
There are two issues that are important with regard to pay: equity and alternatives. The former refers to how much people are paid compared with others inside and outside the organisation. The latter is the value of pay (alone) at different stages of the life cycle.
Other dimensions of pay satisfaction include the amount of compensation, the reasons behind pay rises and the indirect compensation gained through insurance perks and holiday entitlement. Pay structure, procedures and administration also affect employees' satisfaction with their salary.
Optimum job satisfaction can be achieved if the employee can see a clear link between pay and performance. But there are several different features to job satisfaction. Satisfaction with the work itself is integral to overall job satisfaction, as are good relationships with bosses and co-workers. Opportunities for promotion, low staff turnover and confidence in the security of the organisation also play an important role. Pay-level satisfaction is most related to security, pay raise to promotion, and benefit level to satisfaction with the organisation itself.
There are three important lessons for compensation and benefits professionals. Firstly, employees differentiate between the features of pay. This means an employee may be reasonably happy with the amount they are paid, but less pleased about the way in which pay rises are determined and rewarded.
Secondly, the overall correlation between pay and performance is low. There are other factors that always play a part in driving performance, such as managerial style and a company's promotion policies. Employers can not rely on pay to be the engine of performance. This relationship can and does differ enormously from company to company and certain circumstances can seriously reduce the power of money as a motivator.
Thirdly, perception is everything. Most employees do not understand how benefits are calculated or know about the ins and outs of the procedures and processes that drive the system. But this does not stop them having strong views about them. More than anything else, this is likely to affect an employer's reputation.
One thing is certain - dissatisfied employees focus on pay. Discontentment really homes in on compensation, proving that job satisfaction is multi-dimensional. The better managed a person is, the less need there is for employers to worry about compensation. The clue is in the word. Staff are not compensated for performing a job they love doing. But they do believe they should be compensated for any lack of dignity, their time and exhaustion, and tedious or demanding tasks.
It would be preposterous to pay people to play to or indulge their hobbies. That is intrinsic motivation. Alas, there are deeply demotivating jobs that have to be done. But even then, the poorer the management, the hotter the issue of pay. You can not really compensate with compensation.
Adrian Furnham is a professor in psychology at University College London
Key Points
- Satisfied employees are concerned about their contribution to the job and using their skills.
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