The United States is experiencing a historically tight and transient labor market. Employers seeking to remain competitive in such a market would be wise to re-evaluate the nature of employment in their industry, the roles within their companies, and related pay and benefits according to a time-tested theory.

In 1959, Frederick Herzberg, a psychologist and professor at the University of Utah, published what would become a landmark treatise: The Motivation to Work. In that book and subsequent work over the remainder of his career until his death in 2000, Professor Herzberg laid out a “two-factor theory” for evaluating employee satisfaction in the workplace. Many employers will recognize his theory in practice if not by name, but it is important for employers to understand the theory and revisit it from time to time.

The factors referenced in Professor Herzberg’s theory are (1) hygiene and (2) motivational factors of employment. 

Hygiene factors are the basic or core components of employment, such as pay, title, benefits, job security, working conditions, and company policies. Studies by Professor Herzberg and others show that employee perceptions of the hygiene factors in their employment correlate with their level of job dissatisfaction. For example, if employees do not believe they are receiving the pay they deserve or have to work in an environment where inappropriate conduct is common, they are likely to be dissatisfied with their jobs.

Motivational factors include challenging work, recognition, responsibility, and personal growth. These factors are generally intrinsic to the job – they speak to the degree to which employees enjoy their work and believe they have meaningful control over their work and careers. Motivational factors are associated with employee job satisfaction.

The distinction between hygiene and motivational factors is important because they address different components of employee happiness. As explained by Professor Herzberg, “The opposite of job satisfaction is not job dissatisfaction but, rather, no job satisfaction; and similarly, the opposite of job dissatisfaction is not job satisfaction, but no job dissatisfaction.” In other words, if employees are content with their pay and benefits but have little control over their work or prospects for advancement, they will not be satisfied with their jobs. They will only be not dissatisfied.

The below chart summarizes the four generalized possible outcomes in the interplay between the two factors:

Importance for employers

Employers should understand the difference between the two factors in evaluating employee happiness. It is clear that employers should be striving to create work environments in which employees feel adequately paid and excited about their work, but that is not always realistic. Where employers are unable to meet one factor as well as they would like, they can try to compensate with factors over which they have more control. For example, if an employer is unable to pay high wages because of its financial situation, it should try to make up for it by providing employees a chance to take on projects in which they are interested and which give them a meaningful role in the company. Conversely, if employers are in an industry where jobs are inherently uninteresting or lacking in creativity, they will need to provide better pay and benefits. Nevertheless, in either of these situations, the employer is likely to face recruitment and retention challenges as employees seek jobs that satisfy both factors.

Understanding where you as an employer fall on the above chart is particularly important in today’s labor market.