WTF is an emotional paycheck?
Traditional salary packages are no longer enough to retain talented professionals today. Instead, there’s a growing insistence on emotional fulfillment — a currency long overlooked in the employer-employee exchange.
That can be anything from varying levels of flexibility to a positive and inclusive culture where “psychological safety” is embedded, with strong well-being initiatives – the kind of intangible benefits that employers have sought to improve for years, to varying degrees. Now researchers are saying these need to become table stakes and a new term is being bandied around to encompass this evolved employee expectation: “emotional paycheck.”
Here’s a more detailed look.
Let’s unpack exactly what this means.
Naturally, at a time when the cost of living and inflation have risen globally, to the point where decent paychecks aren’t carrying so far (let alone indecent ones), the importance of financial compensation remains core. But alongside the evolution of people’s perspectives on work-life balance, motivations behind accepting a new job or remaining at a current one, are now far more nuanced.
When asked to choose if money or company culture is more important in a job, 73% of workers said a positive organizational culture is most important, according to a new survey from Wiley, a workforce learning provider, including over 2,000 respondents.
While salary, health insurance, 401K and other more tangible benefits used to make up the vast majority of what was considered a compensation package, the shift toward workers placing more value on intangible benefits was a long time coming, though certainly sped up by the pandemic, Kayla Velnoskey, a senior principal researcher with Gartner’s HR practice.
“A competitive pay and benefits package certainty remains critical to attracting and retaining talent, but these other elements, which may be a part of what people have in mind when they think of a ‘good culture,’ can act as differentiators for an organization as well,” she added.
Why should employers care about this?
Employers have focused more heavily on non-monetary aspects of compensation within the past decade by reviewing their employee value proposition, or what they provide holistically when it comes to pay, benefits and perks that contribute to the employee experience. But with the rise of hybrid models, and people’s relocation away from central offices, figuring out what employees now need to remain highly productive in these shifted working norms, remains a priority — particularly for HR chiefs.
“The reality is that employees today want both: competitive compensation and their desired organizational culture,” added Velnoskey.
Is everyone’s idea of an emotional paycheck the same?
Not quite. Like many employee engagement initiatives, there isn’t a one-size-fits-all approach. The term flexibility itself encompasses many things, like where someone works — if it’s from the office, at home, or somewhere in between like a third space. It can also mean when you work — like if someone needs to work non-traditional hours due to caregiving or other responsibilities. Ultimately, it’s an intangible benefit that can have a massive impact on current and prospective staff alike, their engagement with their employer, and their productivity.
And different intangible benefits matter to each generation, according to Wiley’s report. Employees 55 years old and above placed more value on flexibility in their working location than those aged 35 to 44 years, per the report. But Gen Z placed the most value on flexibility out of all age groups, both where and when they want to work, and was also the only group to list PTO as one of their top three non-financial benefits they look for in an employer.
Another November survey from the Conference Board found flexible options like hybrid and remote work are simply not rare luxuries or nice perks to have now, but essential for companies to extend to staff in order to remain competitive and attract and retain the best talent.
In that survey, about 1,500 U.S.-based office workers were asked to list five non-salary compensation elements that were most important to them. They most often cited flexibility, defined as where and when they work, followed by bonus, commission and other incentive pay, paid time off, retirement plans, and healthcare coverage.
“To find out if they’re doing enough when it comes to flexibility, organizations should be asking employees what matters most to them through their employee engagement surveys — especially those organizations with higher-than-normal attrition levels,” said Robin Erickson, vp of human capital at the Conference Board.