Key Highlights
- According to a recent Gallup survey, 75% of the global workforce is either not engaged or actively disengaged at work, and it’s costing the world economy $8.9 trillion annually.
- It’s becoming increasingly critical to improve employee engagement and productivity. Many employers are considering “emotional salaries”, which include the non-monetary job aspects like workplace culture, career growth, and work-life balance.
- Providing competitive salaries is essential, but offering key benefits like health insurance, retirement plans and flexibility is proving to be just as important in retaining talent.
- Small businesses may consider offering improved emotional salaries through greater flexibility. For example, include allowing time off for personal matters, offering mental healthcare benefits and fostering a positive workplace culture with open communication and employee events.
- A strong workplace culture where employees feel valued and heard is a key part of emotional salaries. Business owners can help improve this by making themselves available to employees and involving employees in decision making. A positive culture can help retain employees even when larger companies might be offering higher salaries.
Transcript
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Gene (00:02):
Hey everybody, it’s Gene Marks. Welcome to this week’s episode of The Hartford’s Small Biz Ahead Podcast. Thank you so much for joining me. I’m glad that you’re here this week and this week. I want to talk to you about emotional salary. What exactly is emotional salary? Well, I would point you to an article recently on foxbusiness.com, which cited a recent survey that was done by Gallup, that found that 75% of the global workforce is either not engaged or actively disengaged at work, and its costing the world economy a whopping $8.9 trillion annually. As the data demonstrates boosting employee engagement is not an easy feat. And some employment analysts are noting that companies are now building up emotional salary to increase employee engagement and productivity. So again, you might ask as a business owner, and I might ask the same question, what exactly is emotional salary?
Gene (01:02):
Well, emotional salary is defined as something that is includes the non-monetary aspects of a job such as culture, career, and life balance. A woman named Kaitlyn Knob, she’s the head of workforce research at Achiever’s Workforce Institute in Canada, said, an employee’s emotional salary is the measure of whether they feel rewarded beyond base pay. It is a different world, guys. It’s a different workforce that’s out there. It is not all about compensation, although compensation is certainly an important. But it goes beyond that. Even though the labor market has been loosening a little bit recently, it’s still a very competitive labor market. We’re all trying to find good employees and we’re all trying to retain our best employees as well. It’s more important than ever for a small business. So, the question is, what more can we be doing?
Gene (01:55):
I mean, we want to attract these people, and all of a sudden we’re hearing about emotional salary. Why is this so important and why does it have an impact? And I will tell you this, and I’ve got some good news for you. As small business owners, we excel in emotional strategy is salary. In fact, emotional salary is one of the key benefits that we can offer that I think a lot of large companies can’t offer. And let me give you an example. I mean, I’m thinking of one client that I have. They’re based in Central Jersey. They’ve got about 150 employees, maybe 125 employees. I’ve been working with them. I don’t even want to date myself, but more than 20 years, I go out there quite frequently, a few times a month.
Gene (02:39):
I got to tell you something about this client. Very low employee turnover. I’ve seen the same place faces there for years, and I know for a fact that these people could be making more money if they went to work for a larger company. And there are plenty of larger companies in New Jersey that they could certainly choose from. And yet they stay with this company. And you got to ask yourself why. I mean, if you could be making more money somewhere else, why do you stay at this existing job? Now, some people might call it laziness. Some people just might call it lack of incentive or, but let’s tell you what I would call it. I would say that this client of mine, they actually pay a lot in emotional salary, and it’s just like many other small businesses do as well.
Gene (03:26):
So let me let me unpack that a little bit. For starters, we all know that we’ve got to be providing competitive salaries. I mean, we clear emotional salary only goes so far. We’ve got to pay within a range, which basically means that every year, at least once a year, you should be checking sites like PayScale and Glassdoor and LinkedIn, other sites that, uh, publish surveys and provide data on salaries and compensation by title and region, around the country. You want to make sure that you’re in a range. That’s a baseline. I understand you might not be at the top of the range, but you got to make sure you’re in the range. We get that. Number two is you got to make sure that you are providing key benefits. And there really are three key benefits in 2024 that you’ve got to be providing.
Gene (04:12):
I mean, health insurance or some type of health insurance is super important. I mean, whether you provide it, but you don’t pay for it. Whether you offer healthcare reimbursement accounts, whether you have a, uh, self-insurance program or some type of program, a level benefit program where you’re contributing some and the employee contributes others. All of that is you have a lot of choices out there, but you’ve got to be offering health insurance. You’ve got to be offering retirement pay as well. I mean, people expect there to be retirement benefits when they work. And honestly, with secure 2.0 passing a couple years ago, there are many incentives for small businesses to offer 401k plans at little to no cost. And you’ve also got incentive to contribute to those plans as well. So those are two key benefits you got to provide.
Gene (04:55):
But the third benefit, which has become an essential benefit, speaks a lot to emotional salary. And that’s flexibility. It’s flexibility when people are working in your company. People need more flexibility nowadays. They need to take care of children or older ones at home. They want to work from home more often. They might want to get their jobs done in four days a week instead of five, and still be a productive and delivering employee. All of those things need to be answered. Now, when you run a large company, you’ve got a lot of bureaucracy. You’ve got to deal with a lot of HR policies, a lot of rules, a lot of things. When you are run a small business though, you can be a lot more flexible with flexibility. You can give employees the ability to take time off for school visits or parent meetings or sick children.
Gene (05:40):
You can take, give them time off if they want to spend extra time away on vacation, uh, doing something that’s good for them. Work-life balance. You can do that as a small business that’s even that much more available I think, than a larger business. And that is a form of emotional salary. I’m going to say some other things. I mean, I have a lot of clients that do provide mental healthcare benefits and childcare benefits, even if it’s a little bit, even if it’s sharing with other employers that are local to you absorb the cost of say, childcare facilities, that helps. That’s a form of emotional salary. But in the end, it’s all about your workplace culture, which brings me back to my client in Central Jersey. The workplace culture there is excellent. The company is owned by one guy who’s in his fifties.
Gene (06:26):
He’s like around my age. He has two of his kids in the business. He also has some senior people that help him run the company, but he is a small business owner and he’s there every day. And he knows his employees, all of them. He walks around his place all the time. There are times for periods of weeks where he moves his desk and takes a cubicle in different areas of his companies and works out of there. His door is open, and he is approachable. And people approach him. They come to him not just with their personal concerns or issues, but with ideas about their business or with ways to get things done better. And you know what he does? He listens and he implements as well. That’s all a form of emotional salary.
Gene (07:12):
This is a chance when you work at a company. Because people, when they work at companies, they don’t want to just get paid. They want to feel like they’re accomplishing something if they’re doing something good for the world. My company, we sell CRM software like Salesforce and Microsoft Dynamics and Zoho. I mean, people could look at us and say like, “Well, he’s not like a nonprofit. He’s not teaching kids how to read or saving the planet or a green company.” But you know what? My company, we provide tools so that our clients can be more productive and increase their sales that benefits their customers and benefits their employees. Our clients have tens of thousands of employees when you add them all up together, all of them with families. That depends on our clients for their livelihood and our software helps those clients operate better and grow.
Gene (07:57):
So, we’re doing our own little part, and I really do communicate that to the employees in my business. Every small business plays a role on the earth. On the earth we all do good. And it’s important for our employees to know the kinds of stuff that we do. And for employees that are working for a small business that have direct contact, direct access to that business owner, they get their emotional salary because they feel like they’re giving back. They feel like they’re being heard. They feel like they’re contributing to their organization. Some of my clients even go one step beyond. They do things like they have employee profit sharing plans. I have a handful of clients that are employees stock owned here. You’ve got employees that actually have equity in their company that they work for. They actually have a say in how their company is doing.
Gene (08:43):
They actually have skin in the game. That’s emotional salary at all. The workplaces at the place that I go to that have really good and high emotional salaries are ones where it’s open, it’s free, it’s friendly, it’s a nice place to be. There’s music playing. There’s coffee that’s available. There’s barbecues during the summer. There’s a softball team that plays during the spring and a soccer team that plays in the fall, but there’s no, you know, no requirement to do any of that kind of stuff. They have nice Christmas parties, and they have good July 4th barbecues, and they’re allowed in some cases to bring their pets to the work, in some cases, bring their kids to work as well. And like that company in Central Jersey. With that one business owner who walks around, he truly cares about his employees and his true employees truly care about him.
Gene (09:30):
And those people that I know that own these businesses that have very low turnover, even when employees can go and work for somebody else for more money, I’m telling you it’s because they’re getting paid an emotional salary. They have a nice workplace culture to work out of. And that’s the takeaway that you’ve got to think about. If somebody’s going to spend eight to 10 hours at your place of business, is it a nice place to be? Are you there? Are you encouraging? Are you listening to them? Are you giving them a chance to improve your business? Are you giving them a say? Are you helping them out? Is it, is it a fun place to work? Is it a place that people can tell their friends that I work there, and people say, “Oh yeah, I know that place and it does seem like a nice place to work.”
Gene (10:09):
These are all forms of emotional salary. Yeah, you could be giving benefits as well, like good flexibility and maybe childcare or mental health benefits. That’s all very important. But in the end, in the end, it’s all about your workplace culture. That’s what emotional salary is. So just bear in mind, based on the Gallup study that was just released, emotional salaries are very, very important. It goes beyond monetary compensation. Make sure that you’re compensating your people at a level that’s competitive, but at the same time have a salary. That’s something that is a little bit more intangible because it will keep your people coming back and it will lower your turnover. My name is Gene Marks. You have been listening to this week’s episode of The Hartford’s Small Biz Ahead Podcast. Thank you so much for listening. I hope you enjoyed this conversation. We will be with you again next week with some more advice, advice and thoughts and tips for helping you run your business. And if you need those advice in the meantime, join us at smallbizahead.com or SBA.thehartford.com. Again, thanks for listening. We’ll see you again next week. Take care.
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