Generally, human resource professionals are concerned with retaining and inspiring top performing employees because they provide the greatest return on investment. It can be tempting to offer bigger salaries and over-the-top perks to employees, but does money really buy employee happiness? Turns out, there are other factors that can lead to long term employee satisfaction and loyalty.
The 2015 PayScale Compensation Best Practices Report revealed that 65 percent of employees had left jobs because they wanted more money, but surprisingly, 57 percent felt they were already being paid competitively for the local market. A team of Gallup Nobel prize-winning senior scientists, Daniel Kahneman Ph.D., and Angus Deaton Ph.D, reported recently that money can help to improve daily emotions of employees, but only up to a certain earnings point. Their research uncovered that individuals with annual household earnings of more than $75,000 do not experience added happiness from incremental raises in pay. What these studies highlight is that perception of fair compensation is everything.
PayScale research indicates over and over again that talking about pay is more important than the actual dollars and cents on a paycheck. Increased transparency about pay is critical to improving the perception that employees have, which will help keep them actively engaged in their work.
How can companies improve employee engagement and happiness levels without focusing solely on salary increases?
Companies that emphasize total well-being in employees tend to maintain an actively engaged and satisfied workforce. In the Q12 survey, Gallup and Healthways measured satisfaction as individuals thriving in at least four well-being elements: social relationships, financial security, relationship to their community, and physical health. Companies who include these elements in their overall compensation strategy receive higher marks for engagement than those who do not.
Increasing work life balance results in happier employees
According to the American Psychological Association’s Assistant Executive Director for Organizational Excellence, David Ballard, “Employees whose jobs fit well with the rest of their lives are more engaged and motivated, report higher levels of job satisfaction, have better work relationships and are less likely to say they intend to leave the organization in the next year.”
Regular recognition and positive reinforcement supports engagement
A 2015 survey of 1,200 employees conducted by Make Their Day, advised that the number one motivating factor for employees is a fun work environment (90 percent), followed by praise from their managers (88 percent), and recognition for contributions (83 percent)—much more fulfilling than any financial rewards. In fact, 71 percent of the polled employees stated that the most meaningful recognition they had ever received had no dollar value at all.
What can employers do to retain their best workers?
It’s time to use a combined approach when retaining your best workers. Think of ways to link performance metrics to generous increases in salary, but also develop a strong policy to recognize and reward employees for their daily efforts. Being transparent about performance goals, setting positive examples for employees through better management, and providing a well-balanced work life environment can all contribute to the success of your organization.