HR leaders can support employees through both compensation and non-monetary rewards to improve retention and engagement, according to a report from Achievers Workforce Institute.
By Maggie Mancini
Over the six years that Achievers Workforce Institute has researched workforce trends and job-hunting motivators, career progression and flexibility have remained the top reasons for employees to search for a new job. This year’s Engagement and Retention report marks the first time that global workers say compensation is the number-one reason they will job hunt. Caitlin Nobes, lead workforce analyst at Achievers, explains that this makes sense in the context of ongoing inflation and cost-of-living crisis.
“Workers no longer have the luxury to prioritize flexibility and career over salary, as AWI finds that 71% of workers either struggle or must budget carefully to make ends meet,” Nobes says. “It’s more important than ever to understand and address employee economic challenges and concerns, so financial wellness will help improve overall employee well-being.”
While providing a livable wage is foundational for retention, Nobes says, employees that can meet their core needs are not exclusively or even primarily motivated by compensation. Three-quarters (72%) of employees say they would stay longer at a job where they feel supported and valued compared to a job that pays 30% more but where they don’t feel the same way.
Employees want to feel adequately rewarded and companies can invest in non-monetary benefits—which Achievers calls “emotional salary”—to increase retention and engagement. In fact, Nobes says that emotional salary can outweigh base salary when it comes to engaging and retaining top talent. Achievers’ research shows that employees recognized at least monthly are more likely to prioritize a supportive and caring job over more money, even when they are currently paid below market rate.
“What this means in practice is that you don’t have to out-pay all your competitors to build a successful, committed workforce,” Nobes says. “Just pay them fairly for their skills and meet their non-monetary skills, too.”
Whether HR leaders are focused on it or not, employees are already experiencing a high or low emotional salary. From work-life balance to wellness, coworker friendships to benefits, every HR initiative impacts employees’ feelings of being valued and rewarded.
The report identifies five factors that improve emotional salary, which HR leaders can use to engage and retain beyond base pay. These include:
- culture alignment;
- recognition;
- feedback;
- work relationships; and
- career progression.
Even if companies don’t increase their base salary, focusing on one—or more—of these areas can reduce the risk of attrition while boosting productivity and performance, Nobes explains.
“Middle managers and people leaders are the biggest allies in these efforts,” Nobes says. “Educate and enable them to get on your side so they can act at the frontline. For example, asking for feedback is a great start, but our research shows that acting on that feedback is even more important. Acting on feedback increases trust in company leaders by 75% more than just gathering feedback. Empowering managers to respond to employee insights quickly and effectively will do more in the short term than any organization-level change.”
Recognition programs can go a long way in helping improve employees’ emotional salary and boost cultural alignment. Frequent, meaningful recognition is the “low-hanging fruit” for HR leaders who want to drive growth and change. The report finds that recognition is a protective factor when employers can’t afford to pay salaries above the industry standard line. Overall, employees recognized at least monthly are 22% less likely to identify compensation as the top reason they would job hunt.
“Recognition is one of the three core drivers of culture alignment, another factor for emotional salary and reducing employee turnover,” Nobes says. “Culturally aligned organizations take values-aligned actions. Their values aren’t just painted on the wall, they’re incorporated into every communication and decision at every level.”
Nobes adds that, in many ways, recognition and cultural alignment are interdependent. For example, if a company illustrates work-life balance as a key pillar of corporate values, giving teammates kudos when they take well-deserved time off reinforces that value for both that employee, and others who see the recognition. On the other hand, if leaders boast recognition as a top corporate value and employees are only recognized twice annually, it’s more difficult to make those connections.
When it comes to increasing recognition, Nobes suggests establishing a centralized way to track recognition and understand what’s working and what isn’t. Further, there are a lot of actions HR leaders can take to increase recognition frequency and improve retention, performance, and safety.
- Start at the top. Enlist managers and senior leaders to build a foundational culture of recognition. People recognized by their managers are more likely to recognize their peers.
- Remove the barriers. When recognition is easy, people will do it more often. A great mobile app, integrations with key programs such as Zoom, Outlook, and Teams, and clear steps and expectations will help maintain recognition activity.
- Recognize the recognizers. What gets recognized, gets repeated — including recognition. Highlight and boost great recognition to show how important it is to company culture.
“HR leaders know the power of recognition to motivate, connect, and retain,” Nobes says. “However, recognition is often undirected and non-strategic, meaning organizations are spending a lot of effort and resources but not getting the results they want. Recognition is an engine. If it’s pointed at the ground, you’re making a lot of noise but not moving anywhere.”
Now more than ever, Nobes says, HR should be intentional in recognizing small and big moments alike.
