Why Pay is Not a Top Engagement Driver

You may have noticed pay is not on the list of the Top 10 Engagement Drivers:

1. Recognition
2. Career Development
3. Direct Supervisor/Manager Leadership Abilities
4. Strategy and Mission – Especially the Freedom and Autonomy to Succeed and Contribute to the Organization's Success
5. Job Content – The Ability to do what I do Best
6. Senior Management's Relationship with Employees
7. Open and Effective Communication
8. Co-worker Satisfaction/Cooperation – The Unsung Hero of Retention
9. Availability of Resources to Perform the Job Effectively
10. Organizational Culture and Core/Shared Values

If you are wondering whether we somehow we fudged our data by leaving this important factor off of the list, I can assure you, we did not. Pay is actually not one of the Top 10 Engagement Drivers for employees. Do not take this to mean that offering a competitive salary is not important, because that is certainly not the case. Pay just motivates people differently than the aforementioned Key Drivers of Engagement.

Pay is most carefully considered when a person is applying for a job and considering an offer. In general, people accept offers where the monetary compensation is in the ballpark of what they were hoping for. Over time, employees often expect to receive raises and/or bonuses, but these factors are not just about money. Employees want to be compensated fairly for their work. If they are taking on a heavier workload with more difficult projects, it is likely they would expect additional compensation for their efforts. Part of this compensation could be monetary, but oftentimes, recognition is just as important. A promotion that includes a title change can be just as meaningful, if not more meaningful than an increase in salary.

In addition, a great deal of employee opinion on pay revolves around perception of fairness. If an employee thinks they work harder and produce a higher quality of work than a co-worker, they will very likely hope to make more money than their co-worker.

To better understand how pay affects Engagement, it helps to consider one's personal experiences. At some point, most people have spoken with a friend or family member who was frustrated with their salary. When this person voiced their frustration, he or she probably said something similar to the following statements:

• "I work so hard, I bust my ass on the job and no one even notices. I deserve more money."


• "My manager thinks my co-worker is the Golden Child, so I bet he's making a lot more money than me for doing the same job."


• "I've been earning the same salary for the past four years. I don't have any opportunities to advance at this company. I'm stuck."

All of these statements probably sound pretty familiar, and all of them involve something other than pay.

Have you ever heard someone say something similar to the following statement?

• "I make $42,500 a year. It is absolutely essential that I make $44,500 and I will not be happy in my position unless my salary increases by $2,000."

If someone said that to you, you would probably ask if he or she needed the extra money for something very specific. If not, you might ask if he or she liked the job. If your friend said yes, you might say that $2,000 isn't a huge difference in salary, and that there are more important aspects to a job than making a little more money. Of course, everyone would like to a higher salary, but it is important to look at the big picture. Those big-picture aspects are the Top 10 Engagement Drivers.

From conducting thousands upon thousands of employee surveys, HR Solutions has benchmarking data for a wide variety of employment-related topics. It is interesting to see trending in normative scores for different survey items, as certain items tend to score much more favorably than others. In general, employee perceptions of pay is only 42 percent favorable, much lower than any other employment dimension. This is true for industries where employees make comparatively higher salaries, such as finance, as well as industries where salaries are generally lower, such as retail. This shows that pay is a point of frustration across the board.

To improve employee perceptions of pay, organizations should focus on developing and communicating a clear pay philosophy. A pay philosophy is an organizational standpoint on the methodology of determining monetary compensation. It shows employees the criteria considered when determining salaries, raises and bonuses, and instills a sense of fairness in organizational compensation. Transparency and fairness truly make a bigger impact on Employee Engagement than the actual dollar amount employees receive.

When it comes to pay, writer Leo Rosten got it right:
"Money can't buy happiness, but neither can poverty."