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Culture vs. Compensation – What Matters More?

9 min read

Salary Figure Or Company Culture? What Matters More When It Comes To Achieving Positive Levels Of Employee Engagement?

“Don’t think about making money, think about making a difference, spot where others are doing it badly and do it better.”

~ Richard Branson

Let’s try and understand this with one of the oldest and most acceptable model of motivation – Maslow’s hierarchy of human needs.

The hierarchy-of-needs model by Maslow emphasizes that wages are important. Wages remain as one of the most common motivators for labor. Money is what satisfies the immediate necessities of life such as food, shelter and warmth.

However, this is the least important need for human beings in the hierarchy of needs. Once the basics are met, human beings crave for higher goals that make them feel safe, loved, esteemed and most importantly, leads to their personal growth and fulfillment.

Compensation can help employees meet the first level of the hierarchy as they can afford the things they think they might need for a more fulfilled life. But the usefulness of money stops there. Monetary rewards in terms of salary hikes and bonuses are definitely motivating for employees to accept a job, work harder and give their best. However, money will not be enough if all other factors inside the workplace do not offer a supportive and positive feel. Here comes the role of organizational culture. Once money needs are satisfied, only an empowering culture can lead to higher levels of employee engagement.

“I think everybody should get rich and famous and do everything they ever dreamed of so they can see that it’s not the answer.”

~ Jim Carrey

Having engaged employees is all the more important as it not only has a direct impact on revenues but is also preferred more by employees. As per a study by Gallup, disengaged employees are costing companies over $450 billion in lost productivity. In the same survey, 95% of employees said that culture is more important than compensation. Hence, it is important that organizations understand how to create a culture where employees feel fulfilled.

The Rise Of Transparency

Company culture is no longer a topic discussed in closed conference rooms or only known to people working in it. Glossy terms on the career page of the company’s website are also not enough. Today, culture is a global phenomena and known to everyone.

Social media platforms such as Glassdoor and LinkedIn highlight a lot about company cultures openly. The reviews on Glassdoor about company culture can be enough evidence for a potential candidate to decide whether to accept the offer letter or not. Job seekers as well as employees have complete visibility into how companies function. A good culture will attract great talent and also retain them as it is a sure shot sign of company success. Good reviews can be highly motivating and exciting, along with transparency as to how employees are taken care of in the organization. A positive culture ensures that people are not just happy at work, but they are willing to walk that extra mile to make things work.

Money Can’t Buy Happiness

According to Andrew Chamberlain, chief economist at Glassdoor, the top predictor of workplace satisfaction is not pay. It is the culture and the values of the organization, closely followed by the quality of the senior leadership and career opportunities for the employees within the company. Reviews from Glassdoor data also showed that culture and values of the organization become more important as the income of an employee increases. However, this not not deny the importance of compensation as being one of the top factors that job seekers consider when evaluating potential employers. Once that is made, the next question to ask is what steps can improve employee engagement, morale and productivity.

Focus On Everyday Activities For Employee Engagement

Even though improving culture requires focused and long term thought, it is also the everyday things that matter. The behavior and interactions of employees within a company on a daily basis can change a company’s culture. Even a small issue like an email or the phrases used while conducting a meeting can drive or hamper employee engagement levels. Politics or gossip are bound to make businesses fail, and cannot go ignored. Employee behavior and reactions to daily activities needs to be tracked to understand what is going on. A good way to do this could be to use new tools for employee engagement and feedback in order to track and measure daily interactions.


The Role Of Leaders And Communication

A study by Columbia and Duke University of over 1400 CEO’s and CFO’s found that more than 90% of leaders said culture was important at their firms. Leaders are realizing the importance of a great workplace culture, and this needs to spread. Till the time the top people in management do not participate in improving engagement levels, things are not ghttps://www.forbes.com/sites/susanadams/2015/11/12/corporate-culture-matters-says-new-study/#417ea87122b4oing to work. This is because their approval is needed at every step and for changes to happen, they have to be updated about latest strategies and extend their support for the same. Leaders need to understand and care about culture.

A lot of companies today also try to remove hierarchy hurdles by claiming that they prefer a culture of open communication. The open-door policy has gained momentum in the last few years, especially in start-ups. However, just saying this is not going to work, it also needs to be implemented. If pay is promised, it needs to be acted upon. If an employee is dissatisfied, she should not feel threatened or nervous to voice it out to the hiring manager. There is no place for fear and insecurity when it comes to engaged talent within organizations.

Don’t Neglect Compensation!

While it has been now established that culture supersedes compensation, that in no way undermines the value of the latter! If employees are not paid fairly, chances are high that they might start looking out. The war for talent is real and only having best employees can set organizations apart from their competitors. In a CBPR survey in 2017, only 44% of organizations said that their employees feel that they are paid in a fair manner. However, only 20% employees actually agreed to this statistic. If you want your employees to be giving their best to you, ensure that they are paid competitively and honored with monetary rewards every now and then. For fast paced organizations where much more is expected from employees, pay needs to be examined and revised frequently. The worst is when someone gives their blood and sweat to a cause only to remain underpaid for many months.

If your culture demands a lot of creation and hard work from employees, just a yearly bonus will not be consistent with employee expectations. Frequent payouts are necessary to march along with the speed of the business. And be thoughtful to employee needs. As John Ruskin rightly puts it, a little thought and a little kindness are often worth than a great deal of money.

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    A bunch of inspired, creative and ambitious youngsters- that’s Keka’s editorial team for you. We have a thirst to learn new subjects and curate diverse pieces for our readers. Our deep understanding and knowledge of Human Resources has enabled us to answer almost every question pertaining to this department. If not seen finding ways to simplify the HR world, they can be found striking conversations with anyone and everyone , petting dogs, obsessing over gadgets, or baking cakes.


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