The significance of "Emotional Salaries" in ensuring employee retention in 2025
Struggling with employee disengagement? You're not alone – nearly 80% of U.S. workers are feeling disconnected, according to a study by MyPerfectResume. Gallup reported a 10-year low in employee engagement in 2022, with a mere 31% of employees expressing enthusiasm for their roles. But how can businesses combat this growing detachment from employees?
Some business leaders propose an alternative to monetary salaries: emotional salaries.
Emotional Salaries vs. Monetary Salaries
Gallup reported that employee engagement sunk to a 10-year low, with only 31% of employees saying they felt engaged. Employers can’t afford this growing detachment from employees. But what can they do? Some business leaders argue in favor of “emotional salaries” instead of “monetary salaries.”
In today's stagnant job market, disengaged employees can have a negative impact on morale, decreasing productivity, and potentially leading to attrition. While cutting employee salaries may seem like an effective cost-saving measure during economic hardships, a study revealed that 33% of businesses utilizing this strategy reported a decline in employee satisfaction afterwards.
A study of over 2,000 U.S. companies found that nearly 50% of businesses used the strategy of reducing employee salaries instead of conducting layoffs in response to economic pressures. After pay cuts, 33% of them reported a decline in employee satisfaction. But boosting compensation isn’t the only fix.
Boosting salaries alone isn't enough to reverse disengagement; employers must address its root causes to foster better relationships, encourage a sense of belonging, and connect employees to their organization's mission.
mattering.” When workers feel recognized and valued and employers appreciate their efforts, studies show they’re at lower risk of work stress, burnout and mental health issues, more engaged and productive, plus they add value to the company’s bottom line.
For instance, U.S. workers would be willing to forgo 8.9% of their annual salary for flexible work hours and would sacrifice 8.3% for flexible remote work options. This idea, known as "mattering," emphasizes the importance of recognition, value, and appreciation. When employees feel appreciated, they are less likely to experience burnout and mental health issues, and are more productive, engaged, and valuable to the company.
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Emotional Salaries in Action
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The concept of "emotional salaries" emphasizes the intangible benefits that employees receive from their work, which align with the principles of the "Regenerative Workplace" model, focusing on employees' mental, social, and physical well-being. Peter Miscovich, executive managing director of JLL, explains that organizations that support their employees emotionally, psychologically, and physically foster a happier, more engaged, and high-performing workforce.
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David Bator, managing director of Achievers Workforce Institute, advocates for a strong emotional salary to increase job satisfaction. He emphasizes that offering a high emotional salary is a strategic imperative for employee retention in today's competitive landscape.
JLL. He describes “emotional salary” as the intangible benefits that employees receive from their work that align with the principles of the “Regenerative Workplace” model which focuses on employee mental, social and physical health and well-being.
Mark McDermott, CEO of ScreenCloud, highlights the importance of utilizing design and visual elements to keep employees feeling appreciated, motivated, and happy. Digital signage, for example, can be used to celebrate employees and promote a positive workplace culture.
Achievers Workforce Institute, urges business leaders to lean into workplace agility and emotional salary. He insists that when employees perceive a high emotional salary--the non-monetary compensation that impacts how employees feel about their jobs--they have higher job satisfaction.
Conclusion
, notes that the utilization of design and visual elements are also important for businesses to keep their employees feeling appreciated, motivated and happy. “Making sure your team is happy boosts productivity and reduces turnover and sick days too, McDermott points out. “Employee recognition is an effective way to give your team a motivational boost. Schemes such as ‘employee of the month’ or other schemes that encourage your team to praise each other’s efforts, can make your workers feel valued and appreciated.”
In today's workplace, the focus should be on promoting emotional salary to boost employee engagement, satisfaction, and retention. By addressing emotional needs and fostering a positive, supportive work environment, businesses can create happier employees who are more committed, motivated, and loyal.
Forbes.com last year reveals four actions workers want from their employers to feel valued and appreciated. Employees want to be seen and heard, celebrated and acknowledged, connected to the organization and have growth opportunities. In these tough economic times, boosting compensation may seem like the easiest fix for retention, but more companies are finding that “emotional salaries” are more reasonable and effective strategies when monetary salaries are not possible.
- The Psychology of Emotional Contracts in the Workplace
- The Relationship Between Emotional Bankruptcy and Emotional Exhaustion: When Emotional Capital Is Drained (2012)
- The Impact of Emotional Contracts and the Job Demands-Resources Model on Employee Mental Health and Burnout
- Measuring the Emotional Contract: Employee Satisfaction and Their Perceived Support from Organizations
- To combat employee disengagement, some business leaders suggest shifting focus from monetary salaries towards 'emotional salaries', which emphasize the intangible benefits that employees receive from their work.
- Employers are unlikely to maintain a workforce with high levels of disengagement, as a stagnant job market may lead to decreased productivity and employee attrition. Therefore, boosting salaries alone may not effectively reverse this trend.
- To set the right emotional salary, businesses could consider using design and visual elements, such as digital signage, to celebrate employees and promote a positive workplace culture, thereby fostering a happier, more engaged workforce.