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Engagement has long been hurting companies, as it continues to fall year after year. Some companies have tried to calm down workers by implementing an emotional salary or compensation. This strategy has some backing at all income levels, but there are some big caveats.
Want to know more? Keep reading to find out.
The workforce is more disengaged than ever, at 79%, according to MyPerfectResume. People keep looking for better jobs, which is not surprising considering the economy, but the odd thing is engagement, as even those in high-paying jobs feel disengaged.
So, what is an emotional salary?
An emotional salary is a non-monetary compensation. It can include benefits like flexibility, unlimited paid time off, or remote work. For many companies, this strategy kept people on board even when the market stagnated, and they had to cut pay instead of layoffs. However, the problem of disengagement and satisfaction remains.
For many sociologists, the best leadership skill to combat disengagement is “mattering.” This can be defined as feeling like one makes a difference in the workplace, lowering stress, burnout, and mental health issues, ultimately engaging employees.
“When workers feel recognized and valued and employers appreciate their efforts, studies show they’re at lower risk of work stress, burnout and mental health issues, more engaged and productive, plus they add value to the company’s bottom line.”
Still, an emotional salary does not compensate for non-monetary compensation if the latter is below living standards.
On that last note, Hannah Yardley’s article for The Fast Company begins. She writes that as costs continue to rise, salaries stagnate, and that is a big reason why so many people are looking for a way out. She warns managers and companies that this could trigger a second Great Resignation and that the emotional salary could be a strategy for retention.
Though companies may stand out from their competitors because of their emotional salaries, livable wages are the most critical factor. An emotional salary can only work for those who are already living comfortably; otherwise, it’s a non-factor.
“He told me that a strong emotional salary for employees making a comfortable living isn’t just nice-to-have—it’s a strategic imperative for retention if companies hope to thrive in today’s landscape.”
So, what are the things that fall under “emotional salary?” People cite feedback from a manager, career growth, recognition, coworker relationships, and culture alignment as things that make people stay. This makes sense in general, but especially considering generational problems in retention, such as Gen Z’s career catfishing.
The idea behind emotional compensation is not to cope with general low compensation but to balance a liveable wage. A wage is
Now, on the employees’ side, Erica Lamberg writes a guide to negotiating perks for FOXBusiness. Job hunters and current employers can and should negotiate their emotional salary to ensure their own engagement once their basic needs are covered.
Mindset has been cited repeatedly as one of the main drivers of satisfaction, but the problem for many companies is that it is personal. No one can force people to change their mindset if they don’t want to, so the best way to ensure a positive mindset is to ensure that they’re happy with their decision. Emotional salary comes here.
“Frequent and meaningful recognition is a critical driver of emotional salary, increasing a sense of belonging, engagement and productivity, and lowering the risk of turnover.”
Now, experts have come up with a five-point strategy for employees and job seekers to negotiate their emotional salary. Here it is below:
1. Research: Find the things that you need and want in that order, trying to find reasonable accommodations for your case.
2. Back your strengths: Highlight your specific skills and achievements to give yourself a leg up on the negotiations.
3. Manage expectations: Understand that compromise is key, and you might not be able to get everything you want, but you might be able to get a variation.
4. Understand the compensation package: Ask about the benefits and monetary compensation before asking for the emotional salary.
5. Pitch: Practice how you get the conversation to the negotiation part without sounding pushy.
Emotional salaries can be a key strategy for retaining, attracting, and engaging employees. Still, companies must understand that they are not to be mistaken as a trade-off for a liveable wage, especially as workers are struggling.
Engagement is key for long careers and growth of the employees and the company, so investing in it is essential in 2025. A little can go a long way, with flexibility, one-on-one time, and prioritizing relationships are little to no cost to some companies that want to create meaningful change for their employees’ wellbeing.
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