There is more to keeping workers happy than just paying them well. Indeed, payroll and HR departments are constantly digging around for new ways to keep workers both enthusiastic about their work and happy with their careers. Some companies are better at it than others.
According to research by the Gallup organization, money is a key component in employee happiness – but only to a point. There is a threshold at which an employee feels like he or she is paid fairly. At that threshold, it doesn't appear that more money will make the employee happier or more content. So what will?
Gallup says that it's about engagement. Employees who are engaged are more likely to be enthusiastic and happy. Assuming Gallup's research is correct, the task for HR departments and management is to figure out what makes workers feel engaged. Nail that and they won't have to worry so much about pay raises.
The Gallup Threshold
That point at which pay seems to lose some of its significance is, according to Gallup, $75,000 annually. This is apparently the threshold at which the average employee feels he/she is being compensated fairly. Prior to reaching that threshold, research indicates that people have all the common worries that come with not earning enough. They worry about paying the mortgage and repairing the car.
This is where people not making enough money tend to feel less engaged. Because they are not making enough in their own eyes, they feel like their companies do not value who they are. An employee who feels undervalued is not likely to be engaged with either his/her work or his/her employer's interests.
On the other hand, reaching the $75,000 threshold makes household finances less stressful. Employees worry less about paying the bills. Engagement becomes less about fair pay and more about whether the worker feels like he/she is actually contributing to the success of the company.
Workers not worrying about how much they make go to work with a different mindset. Their mind is more on what their efforts accomplish, not on getting a paycheck at the end of the week. Gallup says this is where engagement becomes the bigger factor.
Engagement in Every Income Level
Despite Gallup's research, there are plenty of employment experts who believe engagement is possible – and necessary – at every income level. Some even believe engagement is more critical as worker salaries go down. Lower income earners need to be more engaged to make up for smaller paychecks.
So where does this leave small companies that cannot afford to pay their employees $75,000 per year? It leaves them with two things. First is finding other ways to compensate employees. Think benefits packages, wellness benefits, meals, coffee service, etc. Second is finding ways to encourage workers to take ownership of what they do.
Making employees feel like what they do actually matters gives them a reason to engage with their jobs. And if you can tie future performance to future pay, you create an incentive for engagement.
Let's say you own a small business with 20 employees. You could grant each employee a 5% virtual share in future profits. That money could be paid out as bonus money at the end of the year. It would be an incentive to engage, work hard, and ensure the profitability of the company.
There is a point at which employees stop worrying so much about money in favor of wanting to know that what they do is actually contributing to something bigger than themselves. But even among workers nowhere near that financial threshold, engagement is still important.