compensation

It is said that a salary increase should have little effect on motivation at work. Appreciation and more responsibility are the key. But that’s not entirely true – because salary does play a role in employee satisfaction.

Money alone does not bring happiness – this is the result of countless job studies that have examined how the level of salary affects the motivation of employees. Sometimes experts are looking for the ideal salary that makes people happy. Time examines how salary increases affect employee engagement. The answers that these studies give to the salary questions are similar: salary increases only have a minimal effect that quickly fizzles out over time. If you want to motivate employees or keep them in the company, you should use other means as a boss.

All of this may be true, but it is not the whole truth. “Money does not necessarily generate motivation, but if the payment is not right, demotivation can arise,” says psychology professor Maika Rawolle from the University of Media, Communication and Economics in Berlin to the “Süddeutsche Zeitung”. The unclear expression of “incorrect salary” is very correct, because there are some salary constellations that reduce motivation. Everyone agrees: It’s about injustice, that is, about a comparison.

Do you want to pay your employees a bonus? Beware, this might not be a good idea: Studies show that extra money can hurt employee motivation and job satisfaction.

What is the ideal salary? Even if funds were unlimited, pinpointing the ideal salary would be difficult. The first intuition is: the higher the salary, the better the work results. But studies show that the connection between compensation, motivation and performance is much more complex. In fact, there is some evidence that people would not be happier in their jobs if they had control over their salary.