Why Company Culture Matters More to Employee Than Pay

Business.com / Strategy / Last Modified: February 22, 2017

We've all heard about the amazing company cultures at Google, Twitter and the like, but how much does this really matter to your employees?

Motivating people to work can be a difficult task, especially when different things motivate everyone. It used to be the case that money was the main thing offered by employers to help increase productivity; but there is mounting evidence, especially with Generation Y stepping into the working limelight, that money is no longer the motivator it once was.

Working culture is becoming a predominant influencing factor in the ability to hire and retain new talent. But in order to create a winning culture you need to take the psychology of people, as individuals and as a team, into consideration.

Related Article: How to Change Your Company Culture Mid-Stream

It is a time-honored tradition that we reward good behavior and penalize the bad, an approach that is known as operant conditioning and proposed by Skinner in 1938. This method of reinforcement encourages people (or in Skinner’s case; rats) to connect an action with an outcome; good behaviour receives a reward, bad behaviour a punishment. We are all familiar with this method, but is it really the best way to encourage productivity at work?

While it’s nice to be rewarded for the work that you do, when used incorrectly it can be perceived as trying to buy someone’s skills, and that can make a person feel unvalued and that their skills are disposable.

This is where Maslow (1943) comes in. He started to explain why simple reward and punishment might not be enough to get the best out of people. His hierarchy of needs demonstrates the fact that every person has a set of needs, which are ranked in a scale based on how necessary they are.

Everyone starts with the basic needs of survival: warmth, food and health. These needs can usually be secured through having enough money. Because of this, managers are realizing that money isn’t the only answer to motivational problems.

To help employees achieve higher levels on the hierarchy of needs, it is important to provide people with a safe place to work, while also giving them the knowledge that their job is secure.

Next, nurturing a welcoming and accepting working culture will start to secure the needs of friendship, self-esteem, confidence and achievement. All of this helps employees to feel appreciated, valued and like the work they are doing is making a difference. If people feel fulfilled and respected in what they do they are more likely to remain motivated and loyal to the company for which they work.

Most people, especially the new working generation, are looking to reach the ‘self-actualization’ stage where they can feel truly valued as individuals. It therefore stands to reason that companies need to be paying attention to how they are supporting their staff.

Related Article: The Good, The Bad, And The Ugly: Who's On Your Team?

Companies who don’t value what their employees bring to the table, besides the revenue that they turn over, find that their attraction and retention rates are much lower than companies that do. In fact, according to Leigh Branham, 89% of managers think that their employees leave for higher salaries when 80-90% of employees actually leave for reasons other than money. Tweet this!

Realizing that fostering a strong relationship with your staff can result in measurable benefits for your company. A study by Madison found that companies who had highly engaged staff through an excellent office culture, took fewer days for illness (2.69 as opposed to 6.19), and would recommend their company more to others (67% against 3% for disengaged employees). These figures strongly support the fact that valuing your staff can have a significant impact on your bottom line.

It’s not hard to create this kind of culture and replicate the success of the leading employee engagement companies (think Google and Twitter). Making small changes to several areas of your working culture is an effective way to change how your company works as a whole. This is described in the marginal gains theory, something that sports teams have long practiced.

By analyzing and improving upon all the parts that make up your company, you can see measurable changes in how your company works and is perceived by your employees. This will help to ensure happiness, higher motivation levels and loyalty amongst your staff.

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