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Compensation Cafe: The Relationship Between Pay and Culture

By Derek Irvine

Recognize This! – Employees say that pay is the most important attribute of culture, but looking deeper into why may offer a more complex picture.

Managing culture can be a complex challenge for many business leaders, especially in terms of aligning what culture means to managers and HR teams versus what it means to employees. That these perspectives can differ probably isn’t much of a surprise, but new data may help shed some light on where those differences are.

As I write in this post over on Compensation Cafe, research from Kronos’ Workforce Institute and suggests there is little agreement between employees, HR professionals and managers when it comes to the most importance attributes of culture. HR and managers cite ‘leading by example’ and ‘shared mission and values’ as topping their lists. Employees, on the other hand, cite ‘pay’ as the single most important aspect, behind ‘respect and support’ and ‘work-life balance.’

That pay emerged as the most important attribute of culture to employees was somewhat surprising to me, particularly in contrast to the usual suspects that both HR and managers agree on. Thinking through some of the potential reasons behind this finding, I developed three potential explanations, excerpted below from my earlier post (click here for more detail):

  1. Pay is actually becoming an increasingly important aspect of culture, [because it] fits into employees’ notion of artifacts as the observable portion of that culture, reflecting deeply held values and implicit assumptions.
  2. Employees completing the survey actually responded to a different question than the one that was asked. Instead of culture, which can be abstract, employees may have relied on a more concrete referent, using their perceptions of the organization as a whole.
  3. Employees interpret pay less in terms of fixed salary or hourly wage and more to do with incentives, bonuses and recognition. As a part of a total rewards strategy, these aspects tend to be more widely broadcast as investments the company can make to strengthen or build culture.

Although certainly not exhaustive, the breadth of potential explanations is a good reminder of the need to dig deeper into the “why and how” behind these types of findings, to really understand the employee experience of culture and the organization as a whole.

What are your thoughts on the pay and culture relationship?