What is emotional compensation?

Emotional compensation is the non-monetary benefits an employee receives at work. These benefits fulfill an employee’s emotional needs rather than financial needs. Emotional compensation helps employees feel empowered and happier at work.

Some of the factors that contribute to feeling emotionally compensated at work include:

• Autonomy: Look for opportunities to foster employee autonomy. Teams that feel trusted and empowered to handle tasks and projects as they see fit can be more productive and engaged than teams that feel micromanaged.
• Belonging: It’s important to understand the difference between belonging and diversity and inclusion. Diversity is about representation and inclusion is the actions you take to increase that representation, but belonging is a feeling of being connected to a community.
• Personal and professional growth:Employees who experience personal and professional growth, like after completing a particularly challenging project, will often feel a sense of achievement. Not only is that feeling satisfying and rewarding, but it can also reflect their ability to develop new skills to overcome challenges. In turn, this boost in confidence can lead to increased job satisfaction and genuine excitement about their work.
• Recognition:When leadership takes the time to recognize a job well done, it can make employees feel valued in the workplace. Knowing how to efficiently useappreciation and recognition can enhance loyalty and job satisfaction.

Employees often want more out of their work than just a paycheck. Every person wants to feel valued, like they’re contributing to something, that they’re learning and progressing in their careers and that their work is appreciated.

Why does emotional compensation matter?

There are many benefits to prioritizing great emotional compensation benefits for your employees:

• Reduced turnover : Employees who feel that all their needs are being met at work are typically more likely to stay longer, which means reduced turnover for your business. A high retention rate could come with many benefits, including cost-savings, improved culture, less disruption to the company and more.
• Improved employee satisfaction and productivity: Employee satisfaction and productivity go hand-in-hand. The happier and more satisfied employees are, the more likely they are to be productive.
• Attract great talent: When you provide your employees with high emotional compensation, they could be more likely to share their experience with others. This can help your company build a reputation as a great employer, which will help you attract great candidates.
• Cost savings: At first glance, providing adequate emotional compensation might seem like the more expensive option. However, this investment has many other benefits that offset the cost. Your business could save with reduced employee turnover , increased productivity and more.

Types of emotional compensation

There are many ways you can offer employees emotional compensation, including:

• Work-life balance: Give employees flexibility over their schedules, if possible. Allow them to work from home when needed, start at the hours that work best for them and create an environment that doesn’t require overtime.
• Culture: Employees typically spend the majority of their week at work, so it must be a space they feel comfortable in. You can help foster a feeling of belonging and community by focusing on culture. Try planning team outings and events, scheduling fun activities to break up the week or hosting monthly lunches or virtual events for the office.
• Personal growth: Give employees the opportunity to grow in their careers. If they don’t see room for progress, they may be more likely to move on to a new organization where they can learn more. Ensure employees have a clear plan for personal growth with career planning built into your review process.
• Positive workplace environment: You shouldn’t underestimate the value and importance of a positive workplace environment. You can help foster this by encouraging feedback, taking complaints seriously and allowing people to speak freely.

Examples of emotional compensation

Let’s take a look at some real-world examples of emotional compensation that might work for your organization:

• Offering extra days off so employees can feel recharged: Consider letting employees earn more vacation days the longer they’re at the company, or offer paid volunteering days or floating holidays
• Employee check-ins: Share employee satisfaction survey results and report on how they will address problem areas.
• Education and learning aid: Consider giving employees a stipend to be used for career advancement or provide a tuition reimbursement benefit.
• Mentorships: Launch a mentoring program that connects those at the organization starting their career with more senior leadership.
• Promoting a healthy lifestyle: Try providing employees with health and wellness benefits, such as an office gym or an annual health and wellness spending allowance.
• Recognition systems: Set up a system for recognizing employees who work hard. This could be a monthly employee of the month, internal employee awards or shout-outs during meetings.

How to implement emotional compensation

Implementing emotional compensation improvements will take thoughtful planning. Here are some steps you can take to get started.

1. Survey employees

Consider surveying your employees to understand what’s most important to them. This will serve two purposes:

• It shows your employees you’re committed to improving the workplace for them.
• It ensures you make changes that the employees will actually value and care about.

2. Set up a budget

Most types of emotional compensation will have a cost associated with them, so it’s time to make room for them in the budget. Remember to view emotional compensation as an investment in your employees and their happiness. Setting the money aside preemptively will mean you won’t have to compromise on your vision for your emotional compensation rollout.

3. Don’t forget to optimize

Implementing emotional compensation programs isn’t typically something you should just do once and forget about. Continuously evaluate if these features bring the results you hoped for with your employees. If your employees aren’t responding to a specific program, you could switch it out for something new. For example, if you implemented a paid volunteer day once a quarter but find that few employees are using it, this program may not be working for your company.

Send out a quarterly survey to employees about your emotional compensation benefits. Evaluate the responses and see if you need to make changes based on how your employees feel.

It takes a compassionate employer who values their employees to actively care about emotional compensation. But there are benefits for taking emotional compensation into consideration for the employer too. If you want happier employees who are more productive and likely to stay longer, start evaluating where you can improve in your emotional compensation offering. Even the smallest changes can be noticed and appreciated by your employees.