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Your Employees Want Higher Pay, but Money Won't Fix Your Problems

Your Employees Want Higher Pay, but Money Won't Fix Your Problems

Story Highlights

  • Higher pay is a critical factor in employees taking a new job
  • Pay may be compensating for a poor employee experience
  • Engagement and wellbeing affect what pay means to employees

We may be done with the Great Resignation, but the Great Resignation isn’t done with us.

According to the BLS, the official “quit rate” in the U.S. labor force remains elevated above pre-pandemic levels.1 Many have relabeled this the Great Reshuffle, as employees are leaving old jobs and finding new ones at historically high numbers.

As a result, many employers are increasing employee pay to attract and retain essential talent in a highly competitive job market. And chances are, employees won’t be turning them down: According to Gallup, the importance of increased pay for job seekers has risen from No. 4 to No. 1 since 2015.

On the surface, this may appear to be an open-shut case: Employees want more money. Employers increase base pay. Problem solved.

But what happens when this doesn’t work?


In the same way that most people prefer a larger house to a smaller one, everyone appreciates more pay, all things being equal. And for some workers, increased pay is the difference between meeting the basic needs of their family or not.

But pay conversations can be (and often are) about something else. When employees ask for higher pay, what they often mean is, “If you expect me to do X, I’m going to need a lot more money than this.”

  • If you expect me to work these hours …
  • If you expect me to work alongside these people ...
  • If you expect me to meet these performance goals …

In these cases, money is compensating for poor management and a poor employee experience. If employees had more flexibility, more recognition or more reasonable expectations, they might appreciate a bigger check -- but that money would feel like a bonus rather than hazard pay for the risk to their health, emotions and overall wellbeing.

As a society, we often manage through pay. Pay is the “easy button” when problems with communication, culture or coaching seem too daunting to solve. The larger your organization, the more tempting it can be to solve systemic problems through money, rather than through the details of individual preferences or needs.

Pay is the “easy button” when problems with communication, culture or coaching seem too daunting to solve.

Nevertheless, the science is clear: Increasing base pay has a negligible effect on performance. And the best predictors of attraction and retention are factors unrelated to pay, such as:

  • overall job satisfaction
  • organizational commitment
  • work environment
  • level of stress
  • workgroup cohesion

A recent Gallup analysis found that engaged employees require a 31% pay increase to consider taking a job with a different organization; whereas not engaged and actively disengaged employees, on average, want a 22% pay increase to change jobs.2 So, while pay matters, the employee experience plays a significant role in what pay means to employees. From a broader perspective, a companywide culture of high engagement creates an additional buffer against external market changes.

Instead of automatically raising payroll to address attraction and retention, leaders ought to address those “hazard pay” aspects of the employee experience that make employees wonder how much their wellbeing is worth.

Show employees that their experience at work matters.


Ryan Pendell is a Senior Workplace Science Editor at Gallup.

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