Employee Engagement and Compensation

High Employee Engagement is Not About the Money

February 7, 2014

One of the biggest myths about employee engagement is that it is all about the money.

Employees aren’t happy, the thinking goes, because they want more money. They don’t think they are paid enough. And because money is the commodity most stretched in many organizations, efforts to boost employee engagement are dismissed as too costly.

Perception, in this case, is not reality.

One of Gallup’s recent takes on the question as both amusing and illustrative. It asked more than 1,000 workers what they would do if they won a $10 million lottery. Their behaviors broken down by engagement levels were startling – nearly two-thirds of engaged workers would stay at their jobs.

Who would quit? 4 of 10 actively disengaged employees would bail, compared with 25 percent of engaged workers.

Time and again respected research organizations find that compensation is not a big driver of employee engagement.

Salary is a big part of job choice. The Corporate Leadership Council, for example, says 44 percent of employees worldwide cite compensation as the main reason they chose a particular job. But it often has little to do with why they stay – or leave.

“Decades of CLC Human Resources research ranks compensation towards the bottom of a list of 38 specific tactics for driving engagement,” the Council says. “Strategies that focus on improving job-interest alignment or manager quality have more than twice the impact than compensation.”

Of course people want to be fairly and competitively compensated. But when average costs of replacing an employee are 1½ times the salary and turnover is skyrocketing, consider this:

A disengaged employee is 2 ½ times more likely to leave for any pay increase compared to employees who are engaged.

That was one major finding of the Dale Carnegie Training/MSW Research Study in late 2012. A few others:

  • 26% of engaged employees would leave their current job for just a 5% pay increase.
  • 46% of partially engaged employees would leave their current job for just a 5% pay increase.
  • 69% of disengaged employees would leave their current job for just a 5% pay increase.

Clearly, money isn’t everything.

So what is?

Tell us what you think – and stay tuned for more.

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