Compensation is often a hot topic when managers discuss job satisfaction. Intuitively, many assume that as pay increases, job satisfaction also increases. Some companies have blindly adopted this strategy.
But, research has determined that the relationship between compensation, performance, and motivation is much more complicated.
More Effective Motivators Than Money
Once employees make a minimum threshold that allows them to provide for their needs, increased income doesn’t increase job satisfaction (Journal of Vocational Behaviour).
Instead, the Harvard Business Review found that employees are deeply affected by workplace conditions. This includes culture, job-competence matching, and their supervisor. An employee’s personality also has a big impact.
Those with positive self-esteem tend to be happier at work. This is even true with those with lower salaries.
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Subsequent research has established that when employees are focused on external rewards, intrinsic motivation on engagement reduces. In this way, money can detract from intrinsic motivation.
The Influence of Life Stages on the Importance of Compensation to Employees
The extent that income levels influence an employee’s satisfaction is heavily influenced by their individual situation and the influence of others.
For example,
A young employee with student loans or a growing family will be more heavily influenced by their income levels than a middle-aged manager with a settled lifestyle, or a CEO in pursuit of big goals.
Compensation is often a psychological symbol. The value individuals place on money is subjective. Some value greater material goods while others seek a more important role, instead of higher compensation.
How Can Organizations Motivate Employees?
To truly motivate the employees, organizations should identify what motivates the individual at that point in time. As mentioned before, this is subjective and very individualistic. It depends on a multitude of variables and personality types.
A motivated CEO may not care about compensation but instead about designations and titles. Or, you may have team members who don’t care about their job titles but want higher compensation.
A broad stroke engagement strategy cannot bridge the gap. It will fail in the long run as motivations change.
When income goals are based on the pursuit of power, narcissism, or overcoming self-doubt, they are less rewarding than those based on the pursuit of financial security, family, or lifestyle goals.
A micro-rewards strategy?
Technology makes it possible to have a better understanding of how rewards influence, or don’t, employee performance and motivation.
Platforms that enable companies to observe the impact of their rewards programs over a period of time can serve as very useful tools. It helps employers to fine-tune their rewards strategy to a more granular level where they are better aligned to the motivators of the individuals receiving the incentives.
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Conclusion
While money can be a strong motivator for employees seeking income security for their family, position, power, influence, and personal growth are often greater influencers for employees.
About Thanks
Thanks is a leading provider of a recognition-based platform that increases communication, builds teamwork, and makes recognition a part of company culture. Fast, easy and simple Thanks makes it easy to bring data-driven employee recognition to your entire organization. O.C. Tanner purchased the Thanks platform in 2019 to fulfill the recognition needs of smaller businesses.
Thanks customers benefit from the same decades of research in employee motivation and company culture that O.C. Tanner enterprise clients enjoy, but in a product that is geared for fast, easy and simple deployment. Whether you’re starting a recognition program or improving and expanding on what you already have, Thanks has everything you need to engage your people with effective, scalable recognition. Thanks is a subsidiary of OC Tanner.