According to the Journal of Vocational Behavior, there's only a 2% overlap between pay and employee job satisfaction, which leads us to believe that pay for performance as a motivator is a fallacy. Increasing an employee's pay is not directly linked to job satisfaction, which is directly linked to retention.
Employee retention IS attributed to job satisfaction, leaving employers charged with tapping into the intrinsic rewards that increase employee engagement and satisfaction. Consider "emotional paychecks" as one of those rewards. Unlike your normally scheduled paycheck distribution, emotional paychecks are conceptual; they tap into the 5 factors that employees want from their employer. Those factors are:
When employees feel that the above 5 factors are being satisfied, their engagement increases, which directly affects employee retention. It is no secret that high levels of employee engagement increase an organization's bottom-line and employee turnover costs the company around 25% of the individuals average annual salary. These numbers make retention a priority for business leaders.
When armed with a robust employee recognition program that encompasses the factors of the "emotional paycheck", organization's will see their employee engagement numbers drastically rise and their turnover rate diminish. When feelings are rewarded, it drives behavior and behavior, not pay, increases and determines overall organizational success.