As recruiters, we understand that people have different motivations for their careers. Some prioritize flexibility, others crave growth. Of course, money is part of the discussion when someone is looking for a new opportunity, and we expect to discuss expectations and competitive compensation with every candidate. But we get concerned when compensation is the dominant motivator for making a career transition.
No one wants to hire someone who is only interested in compensation. If money is the most important factor, the person can be swept away by a higher bidder at any time. Companies that are working to offer well-balanced work experiences want employees who will prosper from investments into great culture. They also want employees who are hoping to be part of the future of the company. “Show me the money,” is a very weak commitment. There’s no real future in that.
We also know there is so much more to loving your job than a big paycheck. Most people find that when they change jobs based solely on money, the new-found pleasure is short-lived. In 2015, a Glassdoor data scientist did a deep dive into salary and job satisfaction. More highly compensated employees do appear to be happier with their jobs (no real surprise there.)
But when they analyzed salary increases, they found a 10% increase in pay was associated with just a one-point increase in overall company satisfaction. A Forbes article citing this study says: “So for an employee making $40,000 a year who got a $4,000 raise, his satisfaction would rise from 77% to just 78%. [Glassdoor’s] Nunez also found “a diminishing return to happiness for every $1,000 in earnings.”
It seems money can’t buy you love or long-lasting happiness.
Many companies that have to pay top dollar for talent are compensating for other shortcomings: poor culture, work/life balance, or toxic team members or leadership. This is also why we never recommend taking a counteroffer once you’ve decided to leave a job. Counteroffers don’t fix any of the real reasons you want to leave; they simply pay you a little more to stay unhappy where you are. So if you’ve made your mind up to leave for the right reasons, why would you stay when you know the other issues aren’t fixed? You’re just delaying the inevitable – and walking away from a new opportunity you thought was the right fit.
If you want to assess your current situation and if you are being paid the “correct” amount, the first step is to verify that your compensation is fair. Is your salary equitable within your company and fair for the market? (A recruiter for your specific role can help with that.) If you’re not being paid fairly, you should take steps to ask for a raise and get into the proper range for your skills and experience.
But if you are fairly compensated, focus on your professional growth and trust your effort and contribution to pay off over time. You can focus on the other areas of your work that create long-term satisfaction and define a place where you can truly be happy.
Excerpt from Relentless Book
There is a process to make sure employers are offering fair and competitive compensation. In the book Relentless by our CEO, Rich Thompson, he discusses why fairness is so important when dealing with paying employees and how companies should determine compensation:
Fairness and Compensation
At a previous company, when we did the Great Place to Work survey, which in part measured fairness in the workplace, there was a question that was something like “Do you feel like you get a fair share of the profits?” We were a multi-billion-dollar global company that was publicly traded. No chance that anybody who was making an hourly wage or was in the mid-to-lower levels of the organization was going to look at the CEO (global or local) and say, “Yeah, I feel like I’m getting my fair share of the profits.”
I found that question to be ridiculous. The question should have been “Do you feel you are being fairly compensated for the work that you do?”
I have a lot of experience with compensation plans, job family banding, market analytics, merit increases, and structuring a host of variable performance plans. I understand what misaligned compensation plans look like and feel like. In a word, they feel unfair.
If the compensation strategy is structured properly, it results in a defendable process that most people feel good about. In the end, determining compensation plans involves the following:
- Guiding principles to define the strategy, which is agreed upon by the executive team
- Analyzing the performance of the plans and payouts
- Research in the form of market studies and competitive comparisons
- A communication plan that transparently shares findings, strategy, and timeline
- An open door in the event there are issues to discuss
Fairness to employees as it relates to compensation is about transparency, process, reason, and communication. With every compensation plan, when you have done the work, you should be able to ask yourself, “Can I defend every component of this?” If you are able to answer yes to that question, you will find that many of the “unfair” aspects of the employee experience subside.