Comp Season + the Hedonic Treadmill
It’s the time of the year when so many of us eagerly count down the days in anticipation. No, not the countdown to summer (I wish!). The countdown to compensation season. You know, the time of the year when many of us await the news of possible pay raises, promotions and bonuses. It’s a mainstay of the corporate culture, with each company having its own unique rhythm.
For some, it will be a frustrating season. The promotion that didn’t happen, the bonus that feels a little lighter than it should or the cost-of-living pay raise that feels underwhelming. But for others, it will be an exciting moment! The promotion you’ve been working hard to receive, with a sweet pay raise accompanying it, and maybe a heaping side of oh-my-goodness-that’s-amazing bonus.
In my 15 years in the corporate world, I experienced both sides of this coin. When I left corporate America three years ago and co-founded Meaning Over Money, our mission was simple: help individuals, families and businesses find meaning in their lives and work. Yes, we all want financial success. But there’s something deeper at play here. There needs to be a deeper level of fulfillment than simply chasing the dollar. This applies to us as individuals, business owners and as leaders of our respective teams. When we simply boil it down to money, we’ve already lost.
Now, back to the topic at hand. Let’s focus on the more enjoyable outcome of these compensation discussions. Think back to a compensation season where you felt satisfied (hopefully this year is one of them!). It was an amazing feeling, wasn’t it? Equal parts euphoria, affirmation and a sense of life, career and financial accomplishment. I love those moments. The ones where it feels like life will be different from here on out. Some of these moments are forever etched into my memory bank.
But something happens. Life moves on. The bonus is deposited into the bank account where it is quickly spent, saved or given away, and the new slightly fatter paycheck becomes “normal.” With the snap of our fingers, that seemingly monumental moment fades into the rear-view mirror and we settle back into the same old us as before. What happened to the happiness? The sense of accomplishment? In the behavioral science world, it’s referred to as the hedonic treadmill.
The Hedonic Treadmill
The hedonic treadmill is a phenomenon by which we humans will ultimately (often quickly) return to our base level of happiness after experiencing good or bad situations in life. That promotion, pay raise or bonus? It feels good right when it happens … but the hedonic treadmill kicks into action and we’re soon back to our same ol’ normal selves. This quirk also applies to much more significant and weighty life situations. Behavioral scientists wanted to see how far this concept could span. They studied polar opposite groups of people:
lottery winners who received life-changing money
- people who became tragically paralyzed in accidents
The results were predictable. People who won life-changing money were extremely happy and paralyzed accident victims were extremely unhappy. Call me captain obvious! We need to fast forward for it to get a bit more interesting. As time passed, even as little as a few months, the happiness levels of lottery winners fell back to where they originally started, and the happiness levels of paralyzed accident victims rose back to where they originally started.
That’s fascinating and all, but what does this have to do with our pay raises, promotions and bonuses? Many of us simply don’t like our job. Depending on which numbers we believe, approximately 70% of Americans dislike or hate their job … 70%!? Put five couples around a table and only three people actually like what they do for a living! How does this happen? In the most open economy in the world, with technology that gives us unprecedented access to the world and everyone in it, how do we get to a place where we can literally do anything we want for a living but 70% of Americans still dislike or hate their job?
There are several reasons for this unfortunate statistic, but part of it, I believe, was the moments we live for during compensation season. Those pay raises, promotions and bonuses. That euphoric feeling, which quickly turns into normal, and then morphs into a different self-talk. “I thought I needed X income to be happy … it must be Z instead.” “I thought having X in my bank account would make me feel secure … it must be Z instead.” So, the cycle continues. We work hard for another year and await next year’s compensation results.
Please don’t hear me saying higher pay and bonuses are bad. What I AM saying is perhaps we need to pause and ask what would actually make us happy.?Behavioral science shows it’s probably not more money … and the hedonic treadmill will likely knock us back down a peg each step along the way. If you love your job AND you’re being paid well to do it, props to you! I was in that camp for many years in my corporate job before leaving it to start my own coaching business. It’s a great feeling. But considering 70% of Americans either dislike or hate their job, chances are more than half the people reading this may be lacking on the job happiness front.
So, during this compensation season, be excited, grateful and satisfied by whatever windfalls come your way. You’ve worked hard, and it’s been a difficult few years. Soak that in and steward it well. But also, really think about what you want to be doing. Here’s a simple test I ask my clients: when you wake up in the morning, which one are you:
A) dreading what you’re about to do
B) tolerating what you’re about to do
C) excited for what you’re about to do.
If the answer is A or B, it may be time to discern what would put you into camp C. If we believe the statistics mentioned above, only 30% of Americans live in camp C. Every one of us could be there, but only if we’re willing to deviate from the “safe” path and pursue meaning over money.
For business owners and leaders, this shouldn’t be something to fear. Rather, this is an opportunity to recognize your team members need more than compensation and it’s an opportunity to help connect meaning to their work. There’s also an opportunity to lean more into this idea of meaning when hiring new team members. Of course, we want the best and the brightest … who doesn’t? While it can be tricky at times, if we look close enough, we can spot the people in our midst (at the interview table or in our own circles) who crave something more than money. People who will take ownership of their work, find some level of meaning in it, and ultimately, add value to the mission.
As an individual, the call is similar. We have three primary choices: we can find meaning and fulfillment in our current work, we can choose to live in camp A or camp B or we can pursue different work that creates excitement when you wake up each morning.
And remember, not making a choice is still making a choice.
I proudly live in the 30% camp, and I hope you do, too! But if not, I hope you’ll join us soon. There’s room for everyone!
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Travis Shelton is the host of the Meaning Over Money podcast, speaker and professional financial coach, helping families and businesses navigate the tension between the world's way and a better way. He works with a wide range of clients who are ready to redefine the role money plays in their life. Listen to his podcast on Spotify or Apple Podcasts.