How much does salary affect employee happiness?
Happy employees have been proven to be 12 percent more productive, helping the companies they work for outperform their competitors by up to 20 percent. Those employees are also more likely to be more sociable, energetic and even take fewer sick days. For this, and so many more reasons, keeping employee moral high is crucial.
While businesses often use salary as a lever to attract new employees, how much does money really affect employee happiness long-term?
Salary VS happiness
When people feel that they’re underpaid for their contributions it can make them feel undervalued. That in turn is likely to leave them open to offers from recruiters or to directly start looking for new roles with higher salaries themselves.
Research has shown that in 2021, the top priority for job seekers is securing a competitive salary, followed by job security and, thirdly, work/life balance.
With almost one in five employed adults describing their financial wellbeing as ‘poor’, or ‘very poor’, research has shown that money (or a lack of) is actually the biggest cause of stress for employed adults. In fact, those suffering from financial stress are 3.8 times more likely to feel anxious and be prone to panic attacks.
With so much stress revolving around money, it makes sense that employees are extremely conscious of how much they’re making VS the time their dedicating to your business.
But, once a higher salary is secured, does money continue to be their main driver of happiness?
More money more problems?
As salary increases, so can responsibilities, expectations and pressure. This can (but not always) lead to a poor work/life balance and a deterioration in employee wellbeing. Some industries are more notorious for these kind of practises – AKA the recent discussion of Goldman Sachs’ “inhumane” 100-hour workweeks. Basically, it doesn’t matter how much you earn if you end up overworked, burnt out and hating your projects.
Researchers at Raisin analysed data from the ONS and Happy Planet Index to pinpoint the figure you need to earn to be happy in the UK. According to them, it’ll take a minimum salary of £33,864.
Kevin Mountford, Co-Founder of Raisin UK, said: ‘While our research suggests money can buy happiness it’s not always the case in real life when put into action. Money does help ease the stresses of daily life which could mean a longer life expectancy in the long-term.’
The pursuit of happiness
The key takeaway here is that money is a primary factor in happiness, but only up to a certain point. If you don’t have the funds you need to support yourself, you’re bound to be unhappy and stressed. Once you earn enough to meet those basic needs, anything else is a cherry on top. Good salaries are the foundation of good wellbeing. It takes more than that to make employees truly happy long-term.
Andrew Chamberlin, Ph.D, chief economist at Glassdoor and director of research at Glassdoor Economic Research, confirms this: “One of the most striking results we’ve found is that, across all income levels, the top predictor of workplace satisfaction is not pay. It is the culture and values of the organization, followed closely by the quality of senior leadership and the career opportunities at the company. Among the six workplace factors we examined, compensation and benefits were consistently rated among the least important factors of workplace happiness.”
How to keep morale high
So, you’ve snagged your dream candidate and offered them a competitive salary, but how else can you keep them happy?
Over the past year we’ve seen a greater focus on employee wellbeing, specifically managing work/life balance while working remotely. Ensuring you have high welfare standards has never been more important. This includes ensuring you’re a flexible, understanding employer who listens to individual needs.
There are so many ways to do this, including focusing on:
Providing a mental health service like Spill
Ensuring a clear progression path
Watching for burnout / noticing people working extended hours
Extended maternal/paternal leave
Providing personalised benefits internally, or through a platform like Benefex
Providing a high pension contribution
Providing financial advice (resources or an external advisor)
Utilising tools like Wagestream, so employees' wages work for them