Forget Happiness. Wellness Emerges as a Compensation Strategy

Employee engagement has been a buzzword in the human resource world for a while. It’s just common sense. When employees are happy and engaged at work they tend to be more productive. Much of this has been focused on employee happiness as an indicator of a solid compensation program – the better employees are paid and the more perks they enjoy; the greater their happiness should be, right? Not so much. Our 2016 PayScale Compensation Best Practices Report indicates that 73 percent of employers believe they are paying fairly, but only 36 percent of employees agree. Interestingly enough, some employers are shifting to creating overall physical and financial wellness for employees, and earning a better ROI. What’s this all about?

Getting to the bottom of employee engagement

To understand employee engagement, one must understand where it all comes from. Engagement can be defined as being, “actively connected to the people, the processes, and the potential of a work environment.” It takes a certain level of interest and excitement to get to this point. For some employees this comes naturally because they know they are part of something amazing. For others, it takes some convincing. But, when engagement is at its best, something magical happens:

  • Employees start working up to their full capacity, cheerfully looking forward to achieving goals
  • Grumbling and complaining stops to allow company-wide morale to rise to higher levels
  • Productivity levels increase across the board so that the company is operating at or above capacity

It is a beautiful thing to encounter an organization that has engaged employees who are thrilled about the work they do.

Learn More About Our Compensation Software


Where compensation fits into employee engagement

Naturally, compensation plays a pivotal role in employee engagement in the workplace. PayScale studies consistently show that when employees believe they are paid fairly for their efforts, they are more engaged and potentially more productive. Employees look at compensation as a measure of how much they are valued by the employer. That’s why getting compensation right matters so much. But throwing more money at employees doesn’t necessarily equate to greater happiness.

Taking engagement higher with total employee well-being measures

Financial aspects of employee happiness are just one portion of the bigger picture. Financial wellness, in the form of fair salaries, generous benefits, and support for short and long term money goals, is one piece of the puzzle. There are also physical health initiatives that can support employee happiness and productivity. But, there are also additional wellness aspects that more employers are focusing on to create well-rounded compensation programs.

Greg Goth, a contributor for the Society for Human Resource Management, writes, “Holistic approaches to promoting employee health, happiness and engagement are gaining momentum for 2016. These initiatives encourage well-being beyond physical health, which has been the traditional focus of corporate wellness programs, by emphasizing factors such as social and community connections, retirement planning, and financial literacy.” While true, these factors can only be successful when the financial and physical needs of employees are being met, because they fall under a higher category of well-being. If employees cannot pay their bills on the salaries that they are earning, they cannot begin to think about saving money for retirement.

It’s also important to note that with the growing number of Millennials who are entering the job market, the generation who is most apt to be mindful of physical well-being due to their already active and health-conscious lifestyles, engagement may be motivated differently from Baby Boomers who are leaving the workforce daily and require financial wellness. Priorities can influence engagement efforts.

Wellness as a balanced strategy

It is recommended that companies take a more balanced look at how they are rolling out compensation strategies in relation to engagement measures. Focusing too narrowly on just the financial side of things, or too much on the physical well-being, can leave employees out. To earn the best return on investment, reaching out and staying connected to what employees want and need is a better way of managing engagement. Actually listening to employees through active surveys, feedback, and real-time data solutions can produce higher productivity levels.


Leave a Reply

2 Comments on "Forget Happiness. Wellness Emerges as a Compensation Strategy"

Notify of
Sort by:   newest | oldest | most voted
Al Lewis

Great article. Thanks for recognizing that “pry,poke and prod” programs and “dieting for dollars” are not part of true employee engagement.

Kairi Gainborough

I love what you said about engaged employees who love the work they do, and how that type of attitude increases productivity. I agree that wellness as a whole is the best way to make this happen. I like the idea of offering monetary benefits, as well as things like health initiatives. I know I would feel appreciated if I worked for a company like that.