PayScale Study Highlights Engagement Value of Appreciation, Company Outlook

PayScale Study Highlights Engagement Value of Appreciation, Company Outlook

Chris Martin, Director of Research at PayScale, showcases the findings of a recent study his company conducted based on survey responses from more than 500,000 US employees. The study sought to gauge the impact of various criteria on employee engagement and intent to stay in their current jobs:

Two variables stood out from the pack for both outcomes: whether an employee feels appreciated at work, and whether they feel their organization has a bright future. Employees who feel unappreciated or who think their organization isn’t going anywhere are less likely to feel satisfied at work and more likely to plan on seeking a new job in the next six months.

Although they don’t align precisely, PayScale’s findings here underline a key insight from our Global Talent Monitor at CEB, now Gartner. This quarterly report provides workforce insights on global and country-level changes about what attracts, engages, and retains employees, based on data from more than 22,000 employees in over 40 countries. (CEB Corporate Leadership Council members can peruse the full set of insights from Global Talent Monitor.)

What our latest global data show is that while compensation is the most common driver of talent attraction both worldwide and in the US, other factors are nearly as important to employees in deciding whether to take a job, including stability (related to the future prospects of the organization) and respect. Indeed, respect has been growing in importance as a talent attraction driver over time, especially in the US, Southeast Asia, and India. When it comes to drivers of attrition (what compels employees to quit), compensation is outranked both globally and in the US by future career opportunity, while people management problems and a lack of opportunities for development are also common factors in employee attrition.

The other interesting finding Martin highlights from PayScale’s study concerns employees’ perceptions of pay practices:

We learned something very surprising – how employees feel about the pay process matters more than how their pay compares to the labor market for similar positions – much more, in fact. In addition, we saw that improving the transparency and fairness of the pay process is 65% more effective at reducing intent to leave than paying employees more relative to the market. The disparity is even more dramatic for employee satisfaction – the effect of pay process is 5.4 times as large as the effect of pay vs. market for improving a worker’s satisfaction with their employer.

Our Total Rewards research practice has looked at this issue in depth and arrived at a similar conclusion. Fair pay doesn’t mean paying everyone equally; in fact, our research shows that a well-designed and well-communicated pay differentiation strategy has a positive impact on employee performance as well as their perceptions of the process. When employees understand how their salary is determined and how it relates in concrete and objective terms to the value they contribute the organization, they are more likely to perceive their compensation as fair and less likely to be demotivated or disengaged.

Contrary to some conventional wisdom, solid but not stellar employees don’t mind that their high-performing peers earn more than they do, but they do mind if their own rewards aren’t differentiated from those of sub-par performers. In fact, recent trends in incentive pay practices to focus on top performers run the risk of harming pay perceptions by leaving less room for differentiation among the bottom 90 percent. CEB Total Rewards Leadership Council members can learn more here about how to design compensation to accurately reward employee performance, and check out our content hub where you can see all of our research, case studies, and tools related to pay and performance.

One caveat we might add to PayScale’s findings, however, is that focusing solely on intent to stay may not be the best way to measure engagement in the current environment. Our Global Talent Monitor data for Q3 2017 found that 46 percent of US employees expressed a high intent to stay in their current jobs, well above the international average of 35 percent. Levels of discretionary effort, however, were much lower, though still above the global average. The challenge for US employers this year may not lie in getting employees to stay, but rather in getting them to do their best work.