What employees want: and why we keep getting it wrong

In the Mel Gibson movie ‘What Women Want’, Mel accidentally electrocutes himself and gains the ability to hear women’s thoughts. In a shocking revelation he learns that women are in fact far more complex human beings.

When it comes to understanding what employees want, HR professionals tend to take a more traditional approach. Employee surveys and exit interviews are typically the chosen method over a hairdryer in the bath.

And yet, perhaps equally shockingly, there still seems to be a disconnect between what employees actually want and what employers think they want.

According to a report published by the Society of Human Resource Management, 69% of students and grads say that job security is very important – yet only 7% of HR leaders think that job security is in the top three benefits that young professionals value most.

58% of HR leaders think that compensation is young professionals’ top priority when it actually ranks fifth.

And at a recent Economist Impact event, the CEO of Cigna Healthcare described the findings of another study: “Perhaps the most surprising, 60% said they valued time for themselves over a well-paid job.”

But is it really that surprising?

Despite the data and despite their good intentions, companies keep getting it wrong when trying to understand what employees want. They’re like Mel Gibson before his accident.

So what’s going on?

Well we’re going to get to our own hairdryer moment shortly but first let’s look at…


Rewards, remuneration and recognition

There are a couple of ways we can think about what employees want – and how to give them what they want.

Hygiene vs Motivation

In 1923 Frederick Herzberg set out to understand employees’ attitudes towards their jobs and what impact they have on their motivation.

His Two-Factor theory described Hygiene Factors and Motivating Factors. Motivating factors increase job satisfaction, while hygiene factors prevent job dissatisfaction.

Hygiene factors are binary, they’re like a hurdle. A certain threshold needs to be achieved to prevent dissatisfaction. You either get over the hurdle or you don’t – but jumping higher doesn’t accrue any further benefit. Hygiene factors are things like job security, status, work conditions and salary. Yes, salary.

Motivating factors are linear. The more of it you have, the more motivating it will be (up to a certain point obvs). Recognition, achievement, advancement and growth are motivating factors.

Employers often get it wrong by confusing the two. They think that pay is a motivating factor. If an employee is unhappy, they can simply pay them more. But it doesn’t work like that.

In fact a study by Nobel Prize laureates Daniel Kahneman and Angus Deaton in 2010 examined the relationship between income and emotional well-being. They found that emotional well-being (happiness) increased with income but only up to a point. After reaching this threshold, additional income did not significantly increase people’s day-to-day emotional well-being.

So pay definitely matters, but it’s a hygiene factor.

This is one way employers keep getting it wrong. Another is how they think about benefits.

Addition vs Subtraction

Most employee benefits are designed around a ‘value add’ model of reward. You get access to a gym, yoga classes, therapy… Even insurance like health and dental, as vital as they are in certain countries, are additive. They’re additional benefits the employee doesn’t need to spend their own money on.

And these are all great, but employers need to also consider ‘subtractive’ benefits.

Because the benefits employees value most when searching for a new job include greater flexibility, the ability to work from home and more holiday.

These are all subtractive. They require the employer to create space for the employee’s life outside of work.

An easy short-hand for this is what we hear anecdotally: “I’d rather just be able to leave on time.”

Thinking in terms of addition and subtraction gets us closer to understanding the disconnect but there’s a more fundamental roadblock.


The hairdryer aka the shocking truth driving the disconnect

The traditional model of productivity views productivity as linear. More time spent working = more productivity. Think about a factory line. More people processing more products = more products to sell. Unfortunately this model is completely inaccurate for modern knowledge work – but that hasn’t stopped it dominating management thinking to this day. (Just look at the evidence related to RTO mandates…)

In this traditional model of productivity it simply doesn’t make sense to offer subtractive benefits or to believe the distinction hygiene and motivating factors. If more time working = more productivity and therefore more revenue (what companies want) – then more flexibility, more holiday, more time for yourself (what employees seem to actually want) clashes with business objectives.

If this is the presumed model of productivity we are working under, it makes more sense for a company pay their way out of the issue (dissatisfaction/ disengagement) as they can calculate an ROI on the pay rise. As long as the employee keeps working just as much or more then it is worth the extra money.

For those companies that do offer these types of benefits to be competitive and attract talent (unlimited holiday!), it is weighed as a cost against productivity; rather than seeing rest, time-off, flexibility etc. as contributing to what makes the company profitable.

And it gets even worse for companies that charge out time as they have literally tied their business model to this, despite there being no necessary connection between time and value.

The only way to reconcile the disconnect between what employees want and what employers want to give them is to recognise that knowledge work doesn’t follow the traditional model of productivity.

That there isn’t necessarily a trade-off.

But until we shift our mindsets and align the incentives of the company with what genuinely creates value, we’re going to keep seeing well-intentioned companies confused about what employees want.