To create more meaningful work for our people, we need to stop focusing on pay and bonuses

Pay was once the principal motivating factor for people at work. Today, the focus has shifted towards finding jobs with meaning.

Money only goes so far in making people happy. For optimal emotional wellbeing, psychologists have found that people only need to earn between $65,000-$75,000 (£49,500-£57,000). The same goes for job satisfaction.

With wages stagnating across all major western economies, people are becoming less focused on what they earn, and more focused on what they do. Ultimately, for people to be happy, meaning comes before money. And it’s up to businesses to provide it.

Pay is not the principal driver behind meaningful work

The classical economic theory homo economicus (economic man) underpins almost all contemporary conversations about work.

The theory asserts that humans are consistently rational and motivated by an intuitive cost-benefit analysis — left to our own devices, people will always choose the option that provides the maximum personal benefit for the least expenditure of effort. This is often interpreted by managers to mean that pay is the most significant motivation for people at work.

These assumptions are worryingly widespread, especially when almost all the available evidence indicates the ‘economic man’ model is inaccurate. Human beings are innately more complex and irrational than the theory implies.

The link between pay and job satisfaction

In a 2010 research paper ‘The relationship between pay and job satisfaction’, the authors calculated the correlation between pay level, pay satisfaction and job satisfaction. The results state that pay is correlated 0.15 with job satisfaction and 0.23 with pay satisfaction on a scale of zero to one — a negligible association at best.

A challenge for businesses is that pay is increasingly no longer available as a major motivating factor. For decades, the fundamental assumption has been that pay motivates people. The reality is different. Few people today expect to receive an annual pay increase.

Even in the best-case scenario of an employee gaining an inflation-matching 2.48% uplift on a £29,009 average UK salary, the pay rise only equates to a £719 a year, or £13.82 a week before tax.

People want more meaning, not more money

With this in mind, it’s easy to see why millennials and Generation Z, in particular, are far more motivated by being part of something bigger than themselves and ultimately want to work in roles that provide meaning to their lives.

With £50,000+ worth of student debt, an unattainable private housing market and the chances of retiring with sufficient money looking increasingly slim, young people want their job to mean something. They want to make a tangible impact on the world around them.

Work, to a large degree, defines our identity. Some would even go as far as saying it defines us as human beings. It’s not surprising that we have a yearning for meaningful work, and that employees who find meaningful work are happier, more productive, hardworking, and take less sick days. Meaning matters.

How does this impact businesses?

For business leaders, the trend of people leaning towards more meaningful work over big salaries has obvious advantages. To attract the best talent, businesses no longer need to dish out extraordinary salaries to have a productive workforce with high morale.

But that doesn’t mean that things can remain the same. The expectation of more meaningful work must be met, or else businesses risk rapidly losing talent to competitors with a wider social cause, that provide greater flexibility and inspire their people at work each day.

If money is no longer the principal motivating factor, how then should businesses go about creating more meaningful work?