Editor's Note: This Classic post by Derek Irvine raises important questions about the relationship between how you pay people and their perceptions about the organization, its values and its culture.
Typically, the statistics we read about in workplace surveys are intuitive. They fit with our basic understanding of how organizations work, or at the very least could work better. That wasn’t the case with one of the findings from a report from The Workforce Institute at Kronos and WorkplaceTrends.com. Employees that took that survey were asked to rate the three most important attributes of workplace culture. The number one answer from 50% of those employees: pay.
There are possibly a handful of companies that clearly leverage pay as a critical part of their company culture, so perhaps the data isn’t completely off base. Netflix and Costco come to mind as companies that define themselves by their willingness to pay in the very top percentiles of market rates. But for the most part, I am surprised that so many employees point to pay as the most important part of culture.
The survey also included responses to this question from HR professionals and managers, offering a good comparison point. According to them, ‘managers and executives leading by example’ and ‘a shared mission and values’ were some of the top attributes of culture. Much more fitting with our intuitive expectations of the key drivers of culture, but findings the report refers to as “striking out” in terms of not aligning with the employee perspective.
So what is driving the results from employees, and what should HR and managers be doing about it?
Explanation 1: Pay is actually becoming an increasingly important aspect of culture. If we look to this definition of culture, perhaps pay fits into employees’ notion of artifacts as the observable portion of that culture, reflecting deeply held values and implicit assumptions. This would be the answer that exemplars like Netflix and Costco tend to support. But given the secrecy with which pay is typically handled and the difficulty of maintaining unique competitive advantage, I would be surprised if this were to be the norm for most companies.
Explanation 2: Employees completing the survey actually responded to a different question than the one that was asked. Instead of culture, which can be abstract, employees may have relied on a more concrete referent, using their perceptions of the organization as a whole. This fits neatly with other surveys that consistently rank pay as among the most important factors at work (often alongside culture as a separate and distinct item). Still, it is not particularly helpful in understanding a potential pay-culture relationship.
Explanation 3: In the context of this question, employees interpret pay less in terms of fixed salary or hourly wage and more to do with incentives, bonuses and recognition. As a part of a total rewards strategy, these aspects tend to be more widely broadcast as investments the company can make to strengthen or build culture, to encourage specific behaviors aligned to core values, and to share a common mission or purpose. This is perhaps the most productive interpretation of the findings above, as it helps us to link together the responses from managers and HR professionals with those from employees.
These explanations are by no means definitive or exhaustive, but do signal the need for more small data to really understand the roles and relationships between pay and culture, and to help driver greater alignment between employees and company leadership.
What is your take on the finding? Do you have another explanation to offer?
As Globoforce’s Executive Vice President of Client Strategy and Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. He is a leader in the WorkHumanmovement and the co-author of "The Power of Thanks" and his articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.
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