“Am I happy with my salary?”,
“Would a raise make me happier?”,
“Is my salary the only reason why I’m at this job?”,
Familiar with these questions? Yeah, by now we all know that one of the main reasons people change jobs is…drumroll…Salary. We also know that more money doesn’t necessarily mean happier people or higher performance.
With that in mind, we set off to explore two real-world examples of tech companies and their people. We brought in Rita Lopes (Happiness Lead at MetaBroadcast) and Dana Svoboda (Chief Joy Officer at Makers Academy) to help us understand the impact salary has in people’s motivation, how performance varies according to compensation and what companies do when trying to keep their employees happy.
Let’s get this started, shall we?
Ok, so salary is not everything
First things first: a lot has been said about salary, motivation and performance. Seriously, a lot. And we want to see through the smoke and understand how companies see salary affecting motivation on a daily basis. According to Dana “(…) salary plays a role in motivation. Although, what I’ve seen in my time at Makers Academy is that salary is not the main factor in motivation. People here seem to be mostly focused on and driven by the work.”
Rita also sees salary as an enabler for people to do “higher work”. When asked about the impact salary has on motivation, Rita said “It’s often useful to think about this in the same way we think about our homes. If you can’t get your heating or boiler to work properly after multiple attempts at fixing it (whether they were the best approaches or not) you’re highly unlikely to consider what’s the best decoration for that wall in your living room. And if the heating situation persists, you’re more likely to give up and find a “better place”, than to continue what feels like a permanently uphill battle. It’s the same reasoning around salary. If you feel you’re underpaid, you won’t be available to consider “higher goals” and you’ll be more sensitive to what could otherwise be seen as a non-issue.”
Makes you think, right? It might not have a huge impact on your motivation and your willingness to do the work you have to do, but it has definitely an impact on your performance… or does it?
If only I was paid more, my code would be so much better
Some studies have shown that higher pays lead to lower performance. Wait, what? Shouldn’t it be the other way around? Yes and no. According to Harvard Business Review, there are actually negative effects of using incentives — such as salary increases — on intrinsic drivers of motivation.
However, Rita believes that “it wouldn’t be right to say salary is the only factor affecting performance. With that being said, our salary reviews are based on performance (which is more than simply productivity or mere work output), so better performances usually both lead to and come from higher pays.”
On the other side, Makers Academy is an apologist of a self-setting salary methodology, where they set their own salaries based on what they feel is fair.
“It’s a highly self-reflective process that holds you accountable for the number you decide upon. This system has worked well for us so far. Sometimes motivation takes a dip when one feels that the value they are adding to the company is not being properly reflected in their salary. This is followed by what we call the ‘salary advice process’ where the issue can be addressed.”.
But how do we know if our performance is as expected, or if we’re going over the top and will be employee of the month, or, worst case scenario, not achieving half of what we’re supposed to? At the end of the day, it all comes down to expectations.
Oh wait, that’s not in my job description.
We’ve all been there. The moment a Trello card suddenly is allocated to us and we feel like it’s not quite what we’ve signed up for, and (let’s be honest) neither what we agreed to get paid to do.
In this case, expectations are one of the most important things to take into consideration when you’re in the process of negotiating your position and your salary within a company.
When asked about if people tend to decline a job because of the proposed salary, Dana said: ”No, I don’t think it ever happened, although there must have been cases when someone great didn’t apply because they assumed we wouldn’t be able to properly compensate them. On a couple of occasions, the interviewing process would end very early once it became obvious that there’s a significant gap between the candidate and company’s expectations.”
Yes, at Makers Academy you are free to choose the salary you want. For the rest of us mortals, however, research has told us companies should always disclose salaries on the job descriptions to immediately filter the candidates who are really interested from the ones that are not willing to get paid what is being offered.
On top of that, Rita also says “It’s important to use the recruiting process to assess not only skills and competencies but also to align the candidate and the company on all issues that will matter — including salary expectations and what the company is ready to offer.”
Though aligning expectations is crucial to people’s satisfaction with their job, there are sexier ways to drive happiness into the workplace. Some examples of this, are the initiatives being done at MetaBroadcast and Makers Academy.
You said gaming room and nerf battles every Friday?
By now it’s clear that companies should know people need more than money to stop the machine from grinding gears and keep things running smoothly. Aren’t we all Millennials after all?
But what incentives besides salary can companies give their employees and candidates?
There are several ways to go about it. Dana, at Makers Academy, says “Firstly, we are free to set our own salary. I feel that being in a company that gives you the autonomy and trust to do this, in itself, is a reward. It’s not very common in companies, so it feels quite special to us. The sense of being trusted and supported to use your best judgement when it comes to salary (and general work) is quite enlivening. We have a culture of transparency and with open communication, this allows us to ‘bring our whole selves to work’. Feeling like you can be authentic in the workplace enhances happiness. It is something we have to actively practice though, to ensure it remains a part of our culture.”
On the other hand, they do things a bit differently at Metabroadcast. Rita comments “We have a variety of policies and procedures that are meant to contribute to happiness in the workplace but we don’t see these as separate from each other or from salary. To mention only a few examples, we have an extra 15 days of optional annual leave at half pay for anyone and everyone who may want the extra days, giving everyone the possibility to take 8 weeks of holiday per year! We also encourage everyone to think about and work on themselves and have flexible working conditions, including no schedules and the possibility of working from home/remotely without missing out on the day’s important information.”
One more important information about MetaBroadcast: They have cake all the time! No. Really.
We don’t know about you, but cake every day sounds good enough for us!
This is it, folks!
Salary is the touchy subject no one wants to talk about during an interview or even in the workplace, but it’s something we all must get used to discussing. As it can be seen, not everything is influenced by salary, even though it still plays a huge part in our motivation.
It’s important that companies understand there is more to life than money and start exploring different, better practices to keep the talent they already have and also attract the talent they need.
Anything you would like to add? Let us know your thoughts and what your company is doing about your happiness on Facebook, Twitter or even join our Slack group!
If you want to know more, the links below will take you to the full interviews with Dana and Rita.
Interview with Dana Svoboda, Chief Joy Officer @ Makers Academy
Interview with Rita Lopes, Happiness Lead @ MetaBroadcast
Bye for now and remember to check what we’ve been up to this month, which is all about salary.
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