Don’t ignore pent up demand for better compensation
New research suggests pay is now the top contributor to job satisfaction
Jun 24, 2014
By Claudine Kapel
Is pay becoming more of a hot button in your organization?
If it is, it likely reflects pent up demand for attention. And organizations that ignore the mounting employee expectations for better compensation may do so at their peril.
Consider the results of a recent survey by the Alexandria, Va.-based Society for Human Resource Management (SHRM), which found compensation is now the top factor shaping employee job satisfaction.
“After enduring years of frozen wages or small pay increases, U.S. employees are now tying compensation to how happy they are at work,” reports SHRM.
When asked to identify what was very important to them, 60 per cent of respondents indicated compensation. The survey reflected responses from 600 employees in the United States.
SHRM notes the last time compensation was the top contributor to overall job satisfaction was the pre-recession period of 2006 and 2007.
“Incomes have grown slowly since the recession, and that undoubtedly is having an impact on workers’ priorities and one explanation for the leap to the forefront by compensation,” says SHRM.
SHRM sliced and diced its analysis in different ways and found the same theme. It notes four generations of employees ranked compensation as either the top or second-ranked aspect of job satisfaction. Further, employees at all job levels – with the exception of executives – ranked pay as one of the top three contributors to overall job satisfaction.
After compensation, other factors contributing to overall employee job satisfaction included:
- Job security (59 per cent)
- Opportunities to use skills and abilities (59 per cent)
- Relationship with immediate supervisor (54 per cent)
- Overall benefits package (53 per cent)
- The organization’s financial stability (53 per cent)
- The work itself (51 per cent).
SHRM suggests improving economic conditions are fueling employee expectations for pay increases. “As the economy begins to recover, employees may expect to see enhancements in their compensation and benefit packages.”
Other SHRM research indicates new-hire compensation levels in both manufacturing and the service sector are up year-over-year. “Top talent may soon be looking elsewhere for opportunities if they do not feel that they are being adequately rewarded.”
So what can you take away from this latest SHRM research? First, even though the sample is U.S.-based, Canadian employees aren’t likely to feel significantly different.
In addition, the research suggests employees have become less receptive to messages about times being tough as the reason for sluggish pay movements. If the economy is stronger and profits are up, employees will want to know when things will get better for them as well.
If your organization hasn’t undertaken a major compensation review in a few years, now may be a good time to complete one. That will help ensure any decisions or course corrections related to compensation are fact-based and thoughtful, versus a knee-jerk reaction to internal or external pressure.
And if times are still tough in your organization, it may be a good time to revisit your total rewards offering.
As SHRM notes, pent up demand for change can fuel turnover, especially among high performers and those with high-demand skills. If upping your game in the compensation arena isn’t feasible, you may need to explore what else you can do to deliver a compelling employment proposition.
Ultimately, though, it’s never just about money. The job satisfaction elements that ranked lower than compensation in SHRM’s survey did so by just a small margin.
So while delivering effective and competitive compensation is vital to any talent strategy, it’s not the only thing that matters. Development opportunities, quality leadership, organizational stability and the nature of the work itself are all elements that employees value in their employment relationship.
Employees want to be shown the money, but not at the expense of things money can’t buy.
Claudine Kapel is principal of Kapel and Associates Inc., a human resources consulting firm specializing in compensation design, performance management, and employee communications. Claudine is also the co-author of The HR Manager’s Guide to Total Rewards and Straight Talk on Managing Human Resources.