They say that money makes the world go round. In English, we know this must be true because of our sheer quantity of money-related idioms. It’s hard to have a conversation without using one — often without even realising it. Money talks, but it doesn’t grow on trees, even though we're always saving for a rainy day. Time is money, but money is also power. Most importantly, money is the root of all evil, and it definitely can’t buy happiness.
In recent years, more and more people have taken this last idiom to heart: money can’t buy happiness. Where once, salary was the primary motivating factor when looking for a job, now, it is one consideration among many.
Gone are the days when you worked the same job for 40 years and retired with a handshake and a gold watch. In a highly competitive professional landscape, expectations around benefits, professional development, career advancement, and workplace learning have advanced vastly. These days, many employees say factors such as company culture, career progression, ethics, values, flexibility, and benefits are as crucial as salary — if not more so.
So, we’ll delve deeper into this phenomenon, asking: if not pay, then what? How can we motivate employees? We’ll set the scene by asking if salary still matters (hint: it does), before exploring seven ways to motivate employees beyond salary.
The short answer is yes, salary still matters. A lot. No one is ever going to turn down a pay rise. The difference is that salary is no longer the be-all, end-all of employee benefits that it once was. Instead, it is one consideration among many.
Consider this hypothetical: a worker is weighing up two job offers. One pays $80,000, the other $90,000. The twist? The higher-paying job has recently been in the news for a PR scandal over their negative environmental impacts. You’ve also heard rumours their work-life balance is poor. On the other hand, the lower-paying company is famous for its values and welcoming culture. Where previously pay might have been the deciding factor — and everything else an afterthought — these are the sorts of mental equations many employees now regularly weigh up when looking for a new job.
To corroborate this point, a study from Princeton University investigated the correlation between pay and happiness. Researchers found that “having a higher income increases happiness but only up to about $75,000 per year (approx. $115,000 AUD). Beyond that, higher pay doesn’t influence happiness as much, and other factors take over.”
For example, 56% of employees say that career growth and opportunity are more important than salary, while 42% of Australians would prefer to work from home than receive a pay rise. Forty years ago, these sorts of statistics might have been unthinkable. But these days, employees are weighing up other factors, indicating greater social awareness and a healthier work-life balance.
Still, this doesn’t mean that pay is no longer important. It is. Objectively. It's just not always the most vital factor for every employee. To re-emphasise pay’s primacy, in 2021, 43% of job-leavers cited “better pay” as their primary reason for switching jobs, making this the most common response ahead of career advancement (32%) and the ability to work from anywhere (31%). What’s more, Pew found that half of all job-switchers in 2021 saw their pay increase by 9.7%, demonstrating that salary is still a major motivator.
As such, it would not be accurate to say salary has become less important to employees, but rather, other benefits have become more important. This point is worth emphasising — these statistics do not mean that employers can get away with paying their employees less if they offer other benefits. Pay is still exceptionally important. Instead, it means businesses must prioritise other benefits, such as career advancement, diversity and inclusion, culture, and flexibility, as well as pay to create a more well-rounded, comprehensive employee benefits equation.
With this in mind, the question becomes, what other factors do job seekers weigh up in addition to pay? And how can you improve your retention by motivating employees beyond salary?
Here are seven ways to motivate employees that aren’t a pay rise (although that’s still good too!).
A recent survey by Logitech found that 42% of Australians would prefer to work from home than receive a pay rise. What’s more, 64% said that working from home saved travel time, thus allowing a better work-life balance.
Additionally, having to return to a physical workplace would cause 41% of employees to seek a job with another company.
The message is clear: employees value flexibility, with many considering it as important as pay.
79% of employees wouldn't accept a better-paying position at a company with questionable ethics, such as not acting against sexual harassment, creating environmental problems, paying female employees less, and selling user data without their permission.
To take this a step further, 73% of people wouldn’t even consider applying to a company unless its values align with their values, while 36% of people have left a job because they disagreed with a company's ethical standards.
Despite this, the 2021 Global Business Ethics Survey finds that just 14% of employees believe they work in an organisation with a strong ethical culture, meaning there is significant room for improvement.
Moreover, 95% of employees would be more likely to stay with a company if it was more empathetic, while 81% would switch to another job for equal pay if they were more empathetic.
For tips on making your organisation more empathetic, see our guide on how to lead with empathy.
56% of employees say career growth and opportunity are more important than salary, according to Forbes.
As ever, employees are crying out for more career progression and L&D opportunities — it’s your responsibility to answer these calls.
Glassdoor found that 56% of employees believe company culture is more important than salary, rising to 66% among Millennials. 71% agree that if their company’s culture deteriorated, they’d look for a new job.
To emphasise this point, 15% of people have turned down a job offer due to poor company culture.
As such, a strong, welcoming company culture is vital to attract, engage, and retain employees. For more insights, see our blog on creating a sustainable learning culture.
Nearly 4 in 5 employees (79%) would prefer new or additional benefits — such as paid time off, flexible scheduling, office perks, tuition reimbursement, performance bonuses, employee discounts, or stock options — to a pay rise.
Finally, 75% of people would hesitate to accept a higher-paying job if it meant taking on more stress.
In contrast, 80% would prefer to work in a happy environment and get on with their colleagues than receive a pay rise.
To help reduce stress at work, see our article on creating a stress-free learning environment.