Money affects how you feel about your job.

by Driven Organization

When I graduated from college several years ago, my classmates and I used salary and only salary to compare jobs. Nothing else got so much attention. Some of my classmates had received offers of almost twice my only offer. To me, that meant that they went to better jobs. I felt that my job was substandard, of a lower class. I felt demotivated and unsatisfied.

It is true that when a worker does not have enough money to cover his basic needs, he experiences dissatisfaction, lack of motivation, and disinterest. This happened to me. I needed to pay student loans, and with my living expenses, I could barely manage. If I had more money, I would have felt much better.

The interesting thing is that the lack of money does make us unhappy, but once our basic needs are met, more money will not make us any happier. At a household income of about $75,000, happiness seems to level off, according to the latest research. Think about it. Is your experience that middle class families are less happy than wealthy ones? Not so.

Money is in fact a relative concept. We think of how well off we are considering those around us, in comparison to them, and not in absolute terms. If every person that you know bought a brand new BMW and you had to stay put with your five year old Corolla, you'd be thinking there is something wrong with you. Now, turn the situation around. You have your five-year old Corolla, but everyone around you has to use the bus. You'd be quite satisfied with yourself.

One way to prove this dynamic is to look at the evolution of wealth in the US. As it has increased over time, people are not any happier. This dynamic is what is known as the "Easterlin Paradox," after a researcher with the same name proposed it in 1971. From it, Easterlin concluded that we compare our financial standing with that of our peers to determine how happy we are.

What to do at work? The solution is to take the money out of the table. A worker needs to be paid a fair salary that is sufficient to cover his basic needs and is fair within the context of the organization and his peers. This is as far as the discussion about money should go. The rest of the discussion must be in regard to the organization's purposes, principles, values, and its environment, and their fit with the worker.

This is not what is done in companies. For example, money is often used to "sweeten" job offers for doubting candidates. This happened to me when I accepted an offer for a job I didn't quite want, and later I found myself stuck in a job where I couldn't give all of myself. The great paycheck did not compensate for what I didn't like. I wasn't happy and the company didn't get the best of my performance either. I eventually resigned and went to another company that paid me a lower salary, doing a job that I loved.

If you want to see other examples of the incorrect use of money, see this article.

Tags: Salary, happiness, leadership, motivation
Published on 02 Feb. 2013