Salary Doesn’t Do What You Think It Does

Larry SpringFuture of Work

Salaries are not enough to keep employees engaged and motivated. Image courtesy of Sirichai Puangsuwan via Shutterstock.

Dr. Laurence T. Spring has served as an educator for 30 years, including 15 as a superintendent. He is a consultant to organizations and schools, specializing in change management and equity issues. He writes about the obstacles that prevent effective change management and how organizations can overcome them.

Getting a business started is not easy. Even when things are moving along, making a bit of money and hitting some targets, there are any number of issues to contend with. One of the biggest issues has to do with keeping your talented staff and keeping them working hard to help the company get out of the “new company” phase and become established. Everyone knows if your talented folks keep jumping ship you can never get momentum and take the next step.

Too many people think the issues of employee recruitment and retention boil down to the issue of salary. Folks who think about these problems through this lens are missing a significant part of the equation.

For sure, salary is important. However, salary is not a motivator in these situations, it is a hygiene factor. Keeping employees engaged and motivated requires a different solution. The issue of motivation and engagement at work has been studied for decades and one of the most enduring bodies of work in the field was compiled by Frederick Herzberg. Herzberg’s two-factor theory delineated the differences between the working conditions that motivated people to work harder and be more committed to their employment and the conditions that demotivated them and left them more likely to leave their work. The former are called motivators and the latter are hygiene factors.

The gist of Herzberg’s Two-Factor Theory (1964, 2008) is that motivating factors increase motivation to work harder and create more commitment to an organization, while hygiene factors work in a somewhat reciprocal manner. Hygiene factors cannot increase motivation but are notable in that if they are not present in sufficient levels, they can reduce motivation and commitment. In other words, more money cannot motivate a hard-working employee to work harder, but a cut in pay or benefits can surely reduce their willingness to put in a full effort.

Knowing which factors are hygiene factors and which are motivators is critical in creating the right culture in an organization. Typical hygiene factors include salary and benefits, like vacation time, insurance, and working conditions. Motivation factors include feeling challenged, having agency in the work, recognition, a sense of meaningfulness, and involvement in the decision-making process.

Hygiene factors tend to be more concrete and easily negotiated items that typically belong in a contract of employment. Knowing how many days of vacation there will be, what the salary is, and the hours of employment are all standard and explicit terms in contracts. Motivating factors are typically less explicit and not often negotiated in such explicit terms. Motivation factors are more often included in an implicit social contract within the organization. Motivation factors are more about what people feel, and less about structures.

Staff having a sense of agency in their work isn’t as much about the existence of a shared decision-making team as it is about people feeling that their opinion gets heard and matters. Of course, everyone would love to be in an organization that has high ratings for both hygiene and motivating factors. These organizations have both money and a healthy organizational culture. Similarly, no one wants to be at those companies who have low ratings for both hygiene factors and motivating factors. These organizations have no money and want to squeeze the last bit of life out of everyone there.

Most organizations have mixed ratings between hygiene and motivating factors. Some companies have low hygiene factors and high motivating factors. Many of these companies are making money quickly and are trying to buy an organizational culture that will cement that profitability. Unfortunately, we know that eventually, low hygiene will eat away at employee commitment and these companies will always be dealing with employee turnover and trying to “turn the corner” on organizational culture.

Other companies aren’t making as much money and try to make up for lower salaries and benefits by keeping the organizational chart flat and being responsive to employee needs. These companies find employees who are true devotees and will put up with all kinds of things, including all-nighters to get a project done, and dramatic shifts in responsibilities when the landscape changes. There is a real “we’re all in this together” sense in these organizations that can keep people committed until the lack of salary and benefits becomes too unbearable. If an organization is at all able, increasing salary is the easier problem to solve. However, getting people to feel that what they do matters and what they think is important is the key to motivation and commitment.

If your organization is dealing with employee turnover and commitment issues, you should do a scan to see that your salaries and benefits are not at the bottom of the sector. If they are within the norm, don’t throw more money at the problem, instead start having conversations. Ask employees what they think, what they like about their job, what could make the company and their job even better. Look for ways to increase the agency people feel. Have serious conversations about the “why” of the work people are being asked to do and whether or not it makes a difference in the bigger picture. Motivation and engagement have to do with people feeling personally challenged and intrinsically rewarded for the work they do. Giving them a seat at the table and opening your leadership practices to include them will help ensure they stay motivated and engaged.

Sources:

Herzberg, F. (1964). The motivation-hygiene concept and problems of manpower. Personnel administration.

Herzberg, F. (2008). One more time: How do you motivate employees?. Harvard Business Review Press.

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