When we talk about feelings in relation to salary, it’s usually to tell you not to let your emotions cloud your judgment during a negotiation. But how you feel about pay still matters. In fact, when it comes to your job satisfaction, it turns out that your feelings about your compensation matter a whole lot — in fact, they matter more than whether you’re actually underpaid relative to the market.
Wait, what? It’s true. Data collected for PayScale’s latest whitepaper, The Formula for a Winning Company Culture, show that how employees feel about their pay has 5.4 times more impact on their job satisfaction than pay itself.
Most people feel that they’re underpaid. Our research shows that two-thirds of people who are being paid the market rate think they should be paid more. This highlights a major problem at many organizations: lack of communication about the pay process and what goes into determining compensation.
How employees feel about pay has 5.4 times more impact on their job satisfaction than pay itself.
How Communication Makes a Difference
“We discovered that transparent conversations about money can actually mitigate low pay,” wrote Dave Smith, Chief Product & Strategy Officer at PayScale, in a column at Harvard Business Review. “So, if an employer pays lower than the market average for a position, but communicates clearly about the reasons for the smaller paycheck, 82% of employees we surveyed still felt satisfied with their work.”
Communication is important in other areas, as well. The two strongest drivers of intent to leave are company outlook and employee appreciation. It only makes sense: who would want to stick around at an organization that doesn’t have a bright future and doesn’t appreciate its employees?
Money can certainly show appreciation, but pay raises and bonuses aren’t the only way for your employer to show that you’re a valued member of the team. Just hearing the words “thank you” can go a long way.
Regardless of how your employer recognizes your achievements, the most important thing may be for them to make an effort to do so, and to include you in the conversation about the company’s future.
Managers, do you need tips on how to prevent communication breakdown and keep your employees happy with their pay? Check out PayScale’s latest whitepaper, The Formula for a Winning Company Culture.
Tell Us What You Think
How do you feel about your salary? We want to hear from you. Share your thoughts in the comments or come talk to us on Twitter.