By: Darren Virassammy
Perhaps, you have left a job for more money. Perhaps, you have seen others leave a job for more money. What is the number that you would need to see, to leave your current job? Arguably, for some of you reading this, you may be willing to leave for far less money, simply because you are so unhappy in your current role. Employers may wonder, what will it take for my top performers to leave for a better salary? Effectively, how much does Money matter?
In the Gallup article Retaining Employees: How much does Money Matter?, by Brandon Rigoni and Bailey Nelson, they report the magic number is: $75,000. Allow me to explain…
The Magic Number: $75,000
Rigoni and Nelson cite the work from: Daniel Kahneman, PhD and Angus Deaton, PhD. These two Nobel Prize winners explored whether money could buy happiness, through examining the relationship between experiencing daily emotions and household income. Their findings were very interesting and indicate:
- Experiencing significant amounts of happiness or stress on any given day improves with income BUT only up to an annual income of $75,000, regardless of geographic location
- People with annual household incomes above $75,000 don’t have commensurately higher levels of this type of emotional well-being, although their general life evaluations may continue to increase
- Money can improve daily emotions but only up to a certain point, which seems to be $75,000
The challenge for employee retention is that most employees are not aware of the income-ceiling on emotional well-being. Gallup’s research has found that 44% of employees would consider taking a job with a different organization for a pay increase of 20% or less.
It is clear that money is a very powerful draw for employees. However, are there other things that employers can do? What are the tangible steps that employers can take to keep employees around? It is well known that turnover is incredibly costly to any organization, and keeping the top performers around is also critical to the overall organizational vitality.
Who is less likely to consider leaving?
Engaged employees are less likely to consider leaving. Gallup has found that 54% of actively disengaged employees would consider leaving for a raise of 20% or less. In contrast, Fully engaged employees, those who feel involved in, enthusiastic and committed to their work, who would consider leaving for a raise of 20% or less falls to only 37%. Gallup’s findings indicate that the majority of actively disengaged workers will move-on for almost any raise, while the majority of engaged workers would need over a 20% raise to consider leaving.
Employee engagement matters!
With Employee engagement levels in the United States effectively stagnant for the past 15 years at between 30 -33% employee engagement in our workforce, this seems like an area where improvement is in order. These engaged employees feel a profound connection to their organization and work with passion. By having managers that encourage employee development and focus on strengths, leaders create a culture of engagement. In these cultures, employees are more likely to WANT to stay, even if a more lucrative offer is on the table.
Let’s step into the common sense corner as we sometimes do:
If you have ever quit a job that you disliked, was it the organization you were quitting, or was it the leadership? Was it your manager, direct supervisor, or senior leadership that you were truly quitting?
We all may move on to another job for more money, but disengagement is often a part…a key part of the equation that even sparks us to look toward moving on. A good friend of mine once left her position as a top performer in Human Resources at a Fortune 500 company, for far less money. Over the year leading to her departure, her responsibilities grew to an unrealistic level of expectation. She was continually asked what help was needed, told she was valued and she continually recommended to her leadership, the need for additional support as she was being set up for failure as was the whole team. Despite the talk, her ideas never went anywhere. “Maria”, as we will call her, was in a state of complete frustration, and eventually handed in her resignation. She was immediately met by her manager with the opportunity to stay for a sizable increase in her pay. Maria informed her leadership that she was leaving for less money due to the fact that despite her best efforts as a top performer, she was not listened to. Maria did not start off disengaged, but became disengaged, NOT because of money, but effectively due to a sheer lack of leadership. Maria connected with a previous co-workers about 6 months later and was informed that 3 people were hired to take over her role.
Organizations may only be able to do so much financially, but employee engagement matters and is something that can be driven through organizational culture. It is the responsibility of leadership to create a culture of engagement, for employees, for clients and shareholders. It is extremely costly across the board to have high levels of disengaged employees. A question I have asked from the common sense corner before is still relevant:
“How can you expect to get highly engaged clients from highly disengaged employees tasked with taking care of those clients?”
Engagement and Retention
Engagement goes deeper than passion for your work and strengths-based development. Organizations that focus on Strengths development and improving all aspects of employee well-being: purpose, social, financial, community and physical can help to improve business performance outcomes.
Through Gallup’s study of well-being, they have found that when employees are engaged and thriving in four of their well-being elements, they are:
- 42% more likely to evaluate their lives highly
- 59% less likely to look for a job with a different organization over the next 12 months.
Effectively, Gallup has found that when well-being is also included as part of engagement, leaders really can make a substantial impact on their employees lives.
Money will always be a part of the equation, no matter what. But truly creating a high performing engaged organization will not come from money alone. Creating a culture centered on engagement and driven by strengths-based leadership, developing employees around strengths is critical to encouraging employees to stay and driving improvement in key performance outcomes.
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Darren Virassammy is Co-Founder and COO of 34 Strong Inc. a leader in StrengthsFinder training and consulting. 34 Strong works with organizations across the United States in developing teams around talent to optimize performance and maximize results. His Top Five are: Achiever, Arranger Relator, Learner, Responsibility. You can connect with him on LinkedIn, or Twitter.