Contributor, Korn Ferry Institute
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What Matters More: Wages or Purpose?
Daniel Goleman, author of the best seller Emotional Intelligence, and host of the podcast First Person Plural: Emotional Intelligence and Beyond, is a regular contributor to Korn Ferry. His latest book, Altered Traits: Science Reveals How Meditation Changes Your Mind, Brain, and Body, is available now.
A growing desire to be a part of something meaningful is one of the issues driving the Great Resignation. Nearly two-thirds of US-based employees say COVID-19 has prompted them to reflect on their purpose in life, and nearly half say the pandemic has prompted them to reconsider the kind of work they do.
According to data from the Labor Department, a record 4.3 million US workers quit their jobs in August, a number that increases to 20 million if we go all the way back to April.
This phenomenon, which has some companies shuttering their doors for lack of help, isn’t just in the United States, it’s global. Panicked, many organizations seem to be responding with cash, increasing wages as a way to attract and retain top talent. As Korn Ferry recently pointed out, salaries are up 4.2% since September 2020.
“When you wake up and see all the resignation letters on your desk, it’s not surprising you reach for your wage lever to keep employees from going out the door,” says Benjamin Frost, a solutions architect in Korn Ferry’s Products business.
On the one hand, these wage increases might be overdue, especially in industries like retail, leisure, and hospitality—areas with the most severe labor shortages and where minimum wage has long had a tendency to lag behind inflation.
On the other hand, this response—especially when it comes in haste—may miss the mark on what people, as they resign, are actually asking for.
Is money enough for workers who want to know their workplace career is about something more than the bottom line?
In this instance, JM Family Enterprises comes to mind. Way back in 2015, the automotive giant was one of a handful of companies in South Florida to increase its minimum wage, offering $16 an hour for every non-salaried employee, including summer interns. Instituted well before COVID, the salary increase wasn’t made in response to a crisis but in alignment with the company’s five core values, the first of which is “consideration.”
JM Family Enterprises defines consideration on their website like this: “We encourage different perspectives and treat people with respect, honesty, and fairness.”
Respect and fairness are so important to the organization that its leaders were willing to invest the annual $6.1 million it took to raise all the employees’ pay. It may not come as a surprise that JM has been on Fortune’s “100 Best Companies to Work For” list every year since 1999. The firm has always been clear: part of its core purpose is the well-being of its employees.
We know the benefits of purpose include greater engagement, more loyalty, and a heightened desire to refer others to the company. Of JM’s more than 4,200 associates, over 40% have been with the company for over a decade. This seems to be what happens when an organization declares its values and lives by them: people tend to stick around.
As Tom McMullen, a Korn Ferry senior client partner who leads the firm’s Pay Equity and Inclusive Rewards practice, reminds us: “Companies have got to do what they’ve got to do to get people in the door.”
While upping pay is one way to do this, it may not be enough of a lever over the long run. If employers can’t meet the need for a workplace that feels meaningful, they are likely to see their workers leave for other organizations that will.