What Matters Most, Culture or Compensation?

Demand for labor is historically high. Workers are quitting at unprecedented rates to take advantage of the demand, and employers are still struggling to fill open positions.

In this challenging scenario, hiring professionals often wonder what job seekers and employees care about most — a company’s culture or the job’s compensation? 

We asked 19 talent leaders who participated in our March 4, 2022, Leadership Connect roundtable for their thoughts. There’s a lot to unpack in this question, of course. And there’s no definitive answer. But this one comes close:

“Many employees, especially hourly workers living paycheck to paycheck, come for the money and stay for the culture,” said the VP of talent attraction at a large US restaurant company. 

During the lively discussion, moderator Jessica Jensen, Indeed’s Chief Marketing Officer, gave roundtable participants exclusive early access to Indeed research on culture, as well as shared Indeed research that sheds light on what workers care about regarding compensation. 

Here are some of those research highlights, along with a few comments from roundtable participants. 

Belonging is the key driver of satisfaction with culture 

In 2021, Indeed conducted an expansive, nine-month study of company culture in the US with global research firm SKIM. By gathering data from more than 2,200 workers on their conscious and unconscious beliefs about company culture, we uncovered what matters most (and least) for workers. We then conducted an additional survey of 2,020 workers in late 2021 to gain insights into how COVID-19 has impacted their views of company culture.

From our findings, we learned that workers think that aspects of work life such as a fun office, good schedule and positive leadership style are the biggest factors in shaping a company’s culture. But their unconscious beliefs tell a deeper story. In fact, we found that belonging is by far the biggest driver of workers’ satisfaction with culture, beating out other key aspects of culture including leadership style, company mission and perks and amenities.

In Indeed’s research on company culture, belonging is defined as the extent to which employees feel supported and empowered by their employers to be themselves at work. 

“Belonging is a feeling of community with people and environments that makes us feel connected,” explains LaFawn Davis, Senior Vice President of Environmental, Social and Governance at Indeed. (Read Davis’s article about the differences between diversity, inclusion and belonging — and why those differences matter.) 

Like our research on company culture, Indeed’s groundbreaking research on work happiness also highlights the importance of belonging, which was found to be a powerful driver of employee happiness.

During the March roundtable, several HR and TA leaders echoed the importance of belonging to company culture. “We just did our annual employee survey, and belonging came out as number one,” said the VP of talent attraction at a US restaurant company. “It’s that sense of being part of something that leads to purpose.”

In Indeed’s follow-up survey on culture during the pandemic, we found that only 30% of employees felt COVID-19 had not impacted their sense of belonging at work. In addition, 27% were looking for a new job specifically because they wanted a stronger sense of belonging at work. These findings suggest a direct line between workers' sense of belonging and churn — and that nurturing belonging isn’t just good for workers, it’s good for business. 

All told, workers report that feeling valued as a whole person (53%), being recognized for their work (49%) and working collaboratively with team members (45%) are the top three factors that impact belonging.

Job seekers care about salary ranges — but adding them to job descriptions is complicated

Separately, Indeed has also conducted research into what job seekers care about in terms of compensation. A December 2020 Indeed survey of 1,500 US workers in various industries and career levels found that 68% are more likely to apply for a job if the salary range is included in the job description; 60% are more likely to apply if the employer publishes salary bands for all positions; and 75% are more likely to go for a job if the employer is known for paying fairly. 

And yet, adding salary ranges to job descriptions is an incredibly complex change management issue with which many employers are grappling. “Employers have more pressure than ever to differentiate themselves to attract and retain top talent, and transparency is a key component of differentiation,” said Donna Schaar, Vice President of HR at CarMax. 

Given today’s intense labor market, employers are sometimes having to pay more to attract talent. But how do you successfully navigate a situation in which the salary ranges in job descriptions are higher than what current employees in similar roles make? If not proactively and carefully managed, that discrepancy can stir resentment among your existing workforce.

Coming soon: more opportunities for engaging discussions

The March 4 event was the second in the Leadership Connect Regroup series of informal discussions held via Zoom, and more are planned for the coming months. Keep an eye on your inbox for updates.

The first Regroup focused on hiring and retention challenges in the healthcare industry. Read the event recap to learn about some of the hiring strategies your peers in healthcare are trying — such as increasing the use of automation to help recruiters spend more time with candidates.

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