This article is included in Entrepreneur Voices on Company Culture, a new book containing insights from more than 20 contributors, entrepreneurs, and thought leaders.
A high salary, large bonuses and frequent raises are often used as incentives to make employees happy. Here’s the thing. Money isn’t the silver bullet to employee happiness. Take for example the infamous case of Gravity Payments.
In 2015 the company raised the minimum salary of their employees to $70,000 a year, which would be implemented over the next three years. Initially, employees were ecstatic. However, there was also a fair amount of backlash from employees. In fact, two employees quit over the raise.
Maisey McMaster was onboard at first and loved the culture. After devoting five years working her way up to financial advisor, she was bothered by the raise. “He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” Ms. McMaster's said.
In her opinion, it would have been more fair to issue smaller increases with the opportunity to earn a future raise after you gained more experience. This is just one example where raises don’t create happiness. If money doesn’t make employees happy then, what exactly does? And why is that such a big deal?
Money can’t buy happiness.
While pay does factor into whether or not an employee joins or sticks with a company, there are many influences that determine happiness. Andrew Chamberlin, Ph.D. - chief economist at Glassdoor and director of research at Glassdoor Economic Research -- states on HBR:
“One of the most striking results we’ve found is that, across all income levels, the top predictor of workplace satisfaction is not pay. It is the culture and values of the organization, followed closely by the quality of senior leadership and the career opportunities at the company. Among the six workplace factors we examined, compensation and benefits were consistently rated among the least important factors of workplace happiness.”
However, there was a study from Princeton that found that “having a higher income increases happiness but only up to about $75,000 per year.” After that, “higher pay doesn’t influence happiness much, and other factors take over.”
Money in your ebank doesn't mean happiness but Chamberlin’s research found that pay and compensation are “still the top factor that job seekers consider when evaluating potential employers.”
To attract top talent employers have to offer competitive pay and benefits. Ultimately, Chamberlin and Glassdoor found that culture and the values of the organization are the largest predictor of employee satisfaction. Followed by senior leadership, career opportunities, business outlook, and work-life balance.
It should be noted that compensation and benefits, work-life balance, and business outlook for the company become less important as pay rises. The data shows overall that compensation and benefits is among the least important workplace factors.
The benefits of happy employees.
So, money doesn’t create happy employees, but why is that such a big deal, anyway?
It’s been found that happy employees are 12 percent more productive, while unhappy employees are 10 percent less productive. Additionally, companies with happy employees can outperform their competitors by 20 percent.
Still not convinced? Happier employees are more sociable, generous, more energetic and healthier. Happy employees take far fewer sick days than unhappy employees. Employee morale impacts productivity and your bottom line. The CDC reported that worker illness and injury cost U.S. employers more than $225 billion annually -- or $1,685 per employee.
So, how can you keep your employee satisfied?
Related: 7 Secrets to Employee Happiness
Get to know your team.
Remember, your employees are all unique and have different happiness triggers. Even though raises may not make everyone happy, it could work for an employee or two. Spend time in actually getting to know your team so that you can identify what’s going to make those specific people happy.
Promote a positive culture and workplace.
Hire employees who are a good fit for your culture and remove toxic personalities already on staff. Acknowledge and celebrate accomplishments together, encourage workplace friendships, provide comfy furniture. Design the office for maximum productivity. Just remember, even though you want the workplace to be fun, don’t force it on your employees.
It starts with you.
A sure-fire way to have a happier team is to become a better manager. Lead by example. Show you care that everyone is satisfied by starting to communicate more effectively and providing performance evaluation feedback. Stay on schedule, using automation, and collaborating with your team.
Make work-life balance a priority.
Offering more vacation time and flexible hours is a good first step. Employees are also looking for organizations that intentionally blur the lines between life and work. For example, Eventbrite “one of the happiest places we’ve ever seen” by Business Insider because the company allows employees to bring their dogs to work. Let employees meditate whenever they want, and go bowling during lunch.
Create a career pathway.
Training opportunities and career mentoring are often used to retain employees. The problem is that it will do the opposite if they can’t climb the corporate ladder. To counter this, businesses should have regular career planning discussions with their employees.
Recognize, reward and appreciate employees.
Achievement and recognition will always motivate your employees - and put a smile on their face. Again, if you get to know your individual team members you can give them rewards that they actually want. At the same, everyone loves receiving a shout and a simple “thank you.” Simply put, show your gratitude and always treat your team with respect.
Include employees in the decision-making process.
This makes them feel like they’re VIPs since they’re involved with helping the business grow. It also shows that their work and feedback is making a difference.
Offer unique benefits and incentives.
Besides the basic benefits, offer employees ancillary benefits, such as dental, optical and wellness. Add perks like gym memberships, quiet spaces for them to take a nap or meditate. Provide healthy snacks, or the option to work from home occasionally.
The Bottom Line
Yes. Happiness should be a goal for business leaders across the board. At the same time, it’s important that you understand that happiness is a product of your company's culture.
That means allowing dogs in the workplace, having pingpong tournaments, and free professional development or yoga classes won’t resolve all of your major underlying problems. Instead, create a culture where employees have the opportunity to connect, learn, and grow.