Why People Value Culture More Than Compensation Now

Culture is a marathon, not a sprint. But in recent years, a trend has developed around treating culture as a commodity — one that can be purchased and distributed. Like a well-stocked mini kitchen and weekly happy hours.

In many ways, it makes sense to the C-Suite. Competition for top talent has become increasingly fierce, and cool perks and rewards, high salaries, and unlimited PTO seem a simple way to win people over. And while those things may in fact help you hire people, they won’t help you keep them long term.

Two things can help you not only attract but also retain great employees: an authentic culture and trustworthy management.

There’s so much misinformation out there about what employees want now — as if any one thing is the answer. Culture is king. Compensation is key. Good leadership is gold. But there’s no silver bullet for employee engagement and genuine satisfaction at work. There’s only investing time and paying attention to what your people want and need to be more productive, engaged, and emotionally fulfilled.

Why company culture is more important than compensation

The truth is that culture, compensation, and good leadership work in tandem to deliver the best possible employee experience. It’s not an easy solution, but the logic is simple. Consider this: foosball and free lunch won’t fix low pay any more than great pay will fix a dull job or an abusive manager. At the end of the day, we’re all alone with the work we do in the place where we do it — be it in a cubicle, on a couch, or at a client site — with the work family we (generally) don’t get to choose.

Today, the way to compete in the talent wars is to shift your focus from compensation (fixed) to culture (variable) and compassionate leadership (variable). The latter two take considerably more work, but in the long term, they cost less and generate far greater talent ROI. But before you can ramp up on culture, you have to tear down trends that aren’t working.

The physical work environment’s impact on engagement

The space in which people work can have a major effect on their ability to perform at a high level. For example, for many types of roles — such as developers, writers, HR, legal, and other people in need of regular quiet and privacy for everyday work — open offices can feel like a bad game of Tetris… or emotional Frogger; particularly when there’s a lack of conference rooms and private solo spaces available. The New York Times recently gave us a comprehensive list of places to cry in an open office — and while it may be satire, it’s no joke. Generally speaking, open offices can create anxiety, and hinder rather than help foster organic collaboration and engagement at work.

Recently, a study from Harvard Business School found that employees in open plan offices spend 73% less time in face-to-face interactions, while email and messaging use increased by more than 67%. Why? Because open offices tend to provide fewer opportunities for personal as well as productive moments, like reading through a report uninterrupted, or taking a few minutes to look at shoes online, respond to emails, even have a snack without conversation… basically, be human at work.

Companies have been pushing collaboration so hard that they’ve forgotten its older, more mature cousin: culture. And true culture comes from emotional well-being, personal satisfaction, professional growth, and enjoying your surroundings, both socially and aesthetically. That includes auditory and visual privacy.

As the Academy of Management found in a recent study, “situational normality and situational aesthetics [have] indirect effects on trust through perceived trustworthiness.” Simply put, aesthetically pleasing workspaces — with access to natural sunlight, privacy, and views of nature — make people more trusting of their surroundings, and of their coworkers. So, while having an open office plan isn’t necessarily a bad thing, employees should also have access to quiet places to focus and/or the flexibility to work remotely when needed.

Recruit top talent by building a culture of employee engagement

The easiest, most basic thing you can do to get a pulse check on how your employees are feeling — about their work, about the culture, about new business initiatives, and so on — is to ask them. There are different ways to do this:

• Host monthly roundtables. Each member of your leadership team can engage a unique group of employees from different teams for a quick Q&A and an open discussion around goals, roadblocks, and ideas at a high level. Pro tip: don’t have managers and their direct reports in the same group.
• Get employee feedback regularly. However you do this — whether it’s employee engagement measurement with 15Five, another data-driven solution, an internal tool, or all of the above — make sure it’s confidential and consistent. People need to feel comfortable giving their unfiltered feedback. They also need to know it has some effect, which is considerably harder to prove or enact if you only send out a survey once a year.
• Provide a comment box. This is arguably the most old school, but putting a comment box in your HR department enables employees to give feedback whenever they want, and in their own words. (This can also be done anonymously via a Google Form.)

Catered lunches and quarterly or annual bonuses are invaluable ways of showing appreciation and support to your employees, albeit different kinds. But the most important thing is listening to what they want. Chances are it’s not as simple (or as expensive) as a raise. Most often, it’s flexible working arrangements, more access to private spaces like huddle rooms, help finding or affording educational resources, or in-office activity like a book club or yoga. And while these things can have added costs, they also save you time and money trying to replace your greatest asset: your employees.