Is Giving Raises Enough?
Company culture drives satisfaction with pay
By Robert Balicki
We’ve all heard that tired catch phrase, “money doesn’t buy happiness.” Try telling that to your salespeople as they leave for greener pastures, though, and see how far you get.
Still, enterprising human resources executives can’t help but wonder: What value does my company get for awarding that raise — loyalty, productivity, a happy workforce?
Fortunately for such executives, Staffing Industry Analysts commissioned a survey last year that asked more than 1,600 salespeople at staffing firms about their happiness at work, their salary and some basic questions about their company. Armed with this information, we will be able to get closer to answering
I began with this inquiry: Given how much a salesperson was compensated relative to the median for her company size and industry subset, what other factors affect how satisfied she is with her pay? Satisfaction was measured by responses to the question, “Considering the value I bring to the organization, I feel I am paid fairly.”
The results are clear: the effect of additional compensation is dwarfed by company culture. Trust in senior management, recognition of employees’ success, open and honest communication, morale, employees’ knowledge of how they fit into the organization’s future plans and the adequacy of benefits all affect pay satisfaction more than compensation.
Here’s where the results get interesting: the worse a respondent rates his company’s culture, the more important compensation becomes. For example, compared to those making median pay, respondents who said that morale was low and that there wasn’t open communication between employees and managers were 3.1 percent more likely to say they “strongly agreed” that they were fairly compensated if they were paid $10,000 above the median. On the other hand, those who gave top marks for company culture were only 2.3 percent more likely to say “strongly agreed.”
Granted, 3.1 percent and 2.3 percent seem like small amounts, but keep in mind that these results came from our “Best Staffing Firms to Work For” survey, where sunny answers are the norm. So throughout this article, our findings should be taken as directional and not viewed as precise results.
Likewise, the data show that the more a salesperson is already paid, the less important that raise becomes.
Age and Culture
To put the relative importance of company culture into perspective, we can examine the effect of age. For a given level of compensation, older salespeople are less satisfied than those under the age of 25. This is natural; people expect raises as they get more experienced. But the magnitude of the difference is striking: salespeople between the ages of 26 and 35 would have to be paid about $44,000 more than what they are currently paid to be as happy as the 25-and-under crowd.
And indeed, there is a noticeable drop in satisfaction with pay for 26 to 35 year olds, with about 8.4 percent fewer saying they “strongly agree” that they are compensated fairly, compared to the youngest cohorts. This is in spite of 26 to 35 year olds earning $26,000 more on average in our sample. So, what explains this drop in satisfaction?
Employees who are 26 to 35 years old are less certain that their benefits will meet their families’ needs and have a more negative view of company morale, among other concerns.
Consider what would happen if the two age groups were equally satisfied with their company culture. I looked at what the data say about two hypothetical employees who gave their companies perfect marks for culture, one under the age of 25 and one who is 30. The latter would have to be paid only $10,000 more to be as happy as the 25 year old.
Now, before 1,600 salespeople beat down my door demanding their raises back, let me hedge my argument by adding this: Successful companies, with high morale, open and honest communication and generous benefits also tend to pay well, so it’s not always easy to tease out the effects of increased compensation.
For more information on salaries for internal employees, Staffing Industry Analysts’ corporate members can download our research online at www.staffingindustry.com.
Robert Balicki is a research associate at Staffing Industry Analysts. He can be reached at email@example.com.