Insights Blog



By QLK Team
on Jan 3, 2019
  • Blog
Job Satisfaction

Irish playwright George Bernard Shaw was known for his disdain for the upper class and for speaking out against what he saw as an unfair distribution of wealth during his lifetime; in the 1870s, he wrote that he considered it "better [to] see rightly on a pound a week than [to] squint on a million." By contrast, our society today seems to operate on the assumption that money can buy happiness, but how strong is the tie between salary and job satisfaction?

In 2010, The Journal of Vocational Behavior published an article by Timothy Judge, a professor in the University of Florida's College of Business, and four of his colleagues likewise engaged in business schools. The authors analyzed the findings of 92 studies that represented 120 years of research and a total of over 15,000 individuals. Their conclusion – the link between salary and job satisfaction was very small, with a correlation of less than 2%. Likewise, a 2013 Gallup poll found, in assessing 1.4 million employees in 192 organizations, that there was "no significant difference in employee engagement by pay level."

In October of 2015, economist Angus Deaton was honored with the Nobel Prize. He is probably best known for his 2010 study (conducted with colleague Daniel Kahneman, a former psychology professor at Princeton) that found that $75,000 was the "magic number" in the household income and happiness equation. Essentially, their study of 450,000 Americans revealed that day-to-day happiness increased as salary increased – up to $75,000, after which "money [did] nothing for happiness, enjoyment, sadness, or stress." This was attributed less to the axiom that money buys happiness than to the perception that "lack of money buys misery." Contentment results from being able to comfortably cover the basic needs of one's household, but the psychological benefits of money after these needs are met is negligible.

It can be a negative cycle – if someone chooses a job for the salary only and then finds the work personally or professionally unsatisfying, their performance on the job may reflect this, resulting in lower pay. People will tend to perform better when they are doing something for which they possess passion and talent, and better performance is generally linked to better pay. Oftentimes, the job that pays more is not the job that brings the greatest personal or professional satisfaction. And each person's unique values, priorities, family obligations, and spending habits will create a very different definition of satisfaction. What is similar among people, however, is that most spend such a great deal of time at work that their satisfaction there will impact their overall life satisfaction.

Studies about intrinsic (e.g. enjoyment, learning, challenge) versus extrinsic (e.g. pay, rewards) motivation at work have revealed that the former more strongly impacts job performance, and that the two forms of motivation tend to be at odds with one another. If an employee focuses on money, he or she will not focus on those intrinsic rewards that lead to better performance – and those employees that are more intrinsically motivated are more satisfied with their jobs. Randstad's 2015 U.S. Employee Engagement Study found that 28% of employees would choose a better boss over a $5,000 raise, and 36% would choose to lose $5,000 a year in salary to be happier at work.

Psychologist Dr. Jeremy Dean, who authors the PsyBlog website, presents the following ten dynamics that truly affect job satisfaction, as reported by a consensus of psychologists, only one of which is related to compensation:

  1. The presence or absence of day-to-day irritations and hassles
  2. The size of the gap between what a person thinks they should be earning and how much they are actually earning
  3. A sense of achieving something at work/making a meaningful, impactful contribution
  4. Receiving frequent feedback, whether positive or negative
  5. A sense of complexity and variety in the tasks performed
  6. The degree of control a person feels over their job and how they perform it
  7. Support from the leadership of the organization
  8. Being able to detach from work at home
  9. The degree of dissatisfaction carried over from any previous jobs
  10. Personality and age – some people are more easily pleased than others and older people tend to be more satisfied than younger people; the Judge study determined that personality (e.g. emotional stability, extroversion, conscientiousness, agreeableness) accounted for 40% of job satisfaction, making it a better predictor of engagement than salary.

Employees who are not satisfied at work can be a financial burden to their companies in terms of lack of engagement and performance or, perhaps, turnover. It is important for individuals to understand what motivates them and for employers to be willing to provide the motivators that best meet their employees' needs.