Companies Add ‘Emotional Salary’ To Lure New Hires

Today, we’re taking a look into a fascinating topic that’s making waves in the world of work: the concept of "emotional salary." According to a recent Gallup report, over 75% of the global workforce is either not engaged or actively disengaged at work. This disengagement is costing the world economy a staggering $8.9 trillion annually. So, how can companies tackle this issue? One emerging strategy is focusing on emotional salary.

Now, you might be wondering, what exactly is an "emotional salary"? Emotional salary refers to the non-monetary aspects of a job that contribute to an employee’s overall satisfaction and sense of reward. It encompasses elements such as company culture, career development opportunities, and work-life balance.

Caitlin Nobes, head of workforce research at Achievers Workforce Institute, explains, “An employee’s emotional salary is the measure of whether they feel rewarded beyond base pay. Emotional salary is completely separate from monetary compensation, which is needed to meet foundational needs for safety and security.”

Employee morale is crucial for productivity. As Nobes points out, “Employees who feel their efforts and work go unnoticed are in turn more likely to underperform, disengage, and eventually quit.” Recognition plays a significant role in boosting emotional salary.

“Something as simple as recognition, which is an investment in emotional salary, can shift this narrative,” Nobes adds. “Frequent and meaningful recognition is a critical driver of emotional salary, increasing a sense of belonging, engagement, and productivity, and lowering the risk of turnover.”

According to the Achievers 2024 Engagement and Retention Report, top motivators for job hunting vary based on an individual’s financial situation. With inflation and rising living costs, 71% of people report struggling to pay their bills or having to budget carefully.

For these individuals, compensation is the primary reason for job hunting in 2024. However, those who are financially comfortable prioritize career progression and workplace flexibility over higher pay.

Nobes notes, “This insight is particularly helpful for industries that already pay high salaries (like finance, technology, and life sciences) who are seeing rampant disengagement rates and skills shortages across their workforces.” Essentially, once core needs are met, compensation alone does not drive job satisfaction. “Many of us can probably think of a job where we were very unhappy despite relatively high wages,” she continues.

Achievers’ research identifies five ways to increase employees’ emotional salary: cultural alignment, recognition, work relationships, feedback, and career progress. “They’re all interconnected and mutually inclusive,” Nobes explains. When companies align their initiatives with employee priorities, the results are remarkable: higher productivity, higher job satisfaction, lower turnover, and reduced absenteeism.

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