While salary might be a powerful tool for attraction, it doesn’t drive employee satisfaction in the way many employers may assume. These three predictors matter far more.

What drives employees’ satisfaction at work?

It’s a question that has led to countless research papers, kept HR practitioners up at night, and that some have tried to solve with ad-hoc end-of-year bonuses, workplace perks and company lunches.

The answer is often more complex. A highly paid employee might be miserable in their job, and a lower paid employee could feel more content and fulfilled.

Offering a raise is unlikely to retain an employee who’s already a flight risk – not without first identifying and addressing the factors that drove them to consider leaving in the first place.

New data from SEEK’s 2025 Workplace Happiness Index, which surveyed over 3000 Australian workers, reveals just 57 per cent of employees are happy at work, with 15 per cent reporting they were somewhat or extremely unhappy. 

Purpose was reported as the most powerful driver of workplace happiness, followed by day-to-day responsibilities and strong leadership. The influence of salary dropped three places this year, and was the 12th ranked factor of happiness at work.

More recently, research conducted by Dr Tim Ballard, Senior Research Fellow at the University of Queensland, further unpacks the factors driving satisfaction in the workplace. 

His analysis shows that salary itself has a neutral impact on job satisfaction and that employees’ sense of satisfaction may be more greatly influenced by what employees expect from their salary (see graph below).

Source: Dr Tim Ballard

Based on comprehensive data from the Household, Income, and Labour Dynamics in Australia (HILDA) survey, which takes a comprehensive snapshot of the working lives of 22,239 Australians from 2005-2023, Dr Ballard’s analysis identified having a variety of tasks and being paid fairly for work as top factors, followed by job security and autonomy. 

As Dr Ballard writes, “Once we accounted for other factors like occupation and industry, people earning different salaries reported similar levels of satisfaction. This suggests that the perception of being paid fairly matters far more than the actual dollar amount itself.”

Salary sits in the middle of the pack, while, unsurprisingly, stress-related factors actively detract from an employee’s sense of job satisfaction.

“My instinct is that salary is important for decisions about which jobs to take when [you’re] potentially moving jobs,” says Dr Ballard. “But if you have 12 to 24 months of being at that salary, your reference point adjusts. Once you’re used to it, it’s seen as neutral.

“I don’t think [salary] has a persistent effect on satisfaction in the way that other things do, such as autonomy.”

When salary isn’t – and has never been – solely sufficient to motivate and retain top talent, organisations need to invest just as heavily into their work design and workplace cultures, and ensure pay structures are equitable and transparent.

Based upon Ballard’s analysis, here are three other practices that measurably drive a sense of satisfaction in people’s jobs.

1. Redesign work for task variety

The way work is structured can greatly influence engagement, productivity and wellbeing. 

This is echoed in psychosocial legislation, with Safe Work Australia identifying low job demands, such as highly monotonous or repetitive tasks, as a psychosocial hazard employers are obligated to control, not just high and extreme job demands.

“Variety is important because it gives people opportunities to try new things and fosters skill development – and that’s important for people to develop a sense of confidence in their work,” says Dr Ballard.

He says this variety is particularly significant for enhancing professional development and satisfaction for cohorts such as early career employees, helping to uncover potential career pathways within the organisation.

HR can systematise effective work design and ensure employees have access to a variety of interesting work using mechanisms such as secondments and job rotations, as well as embedding dynamic learning opportunities into roles that stretch employees without straining them on top of their usual responsibilities.

This requires a careful balance, says Dr Ballard.

“The other side of it is [while] variety is good, you don’t want so much variety and overload, that it actually starts to become a demand.”

Ensuring managers are regularly checking in with employees for points of friction can help ensure these opportunities are enriching, not draining.

Read HRM’s article How to differentiate between stress, stretch and strain.

2. Clearly communicate processes around pay

Dr Ballard’s analysis highlighted a distinction between an employee’s salary by the dollar-amount and the perception that they were being compensated fairly for their work.

“It’s the perception you’re being paid relative to what you’re worth that gives employees the sense the organisation values them and appreciates what they’re doing,” says Dr Ballard. “That psychological affirmation is really powerful.”

For HR practitioners operating in environments in which a pay increase isn’t possible, this means managing conversations around pay with judiciousness, clarity and transparency.

HR can coach managers on how to sensitively navigate turning down a pay raise rather than responding with point blank rejections which can breed resentment and distrust. 

Dr Ballard advises managers to design a practical plan with the employee which outlines what’s needed for a promotion, and prompt managers to follow up on these as action items in one-on-one meetings.

“It’s not just a conversation [containing] feedback that’s a net negative to the employee, but [about] putting employees in a situation where the conversation is: How do we help you get there?”

Building psychological safety to help employees feel confident to raise their concerns around career progression is also key, so that these conversations aren’t only relegated to mid-year evaluations.

Learn how to approach talent management as a dynamic and holistic process in your organisation with AHRI’s short course.

3. Implement flexible practices and autonomy

Dr Ballard’s analysis also demonstrates that flexibility and autonomy – such as an appropriate level of decision-making powers, freedom to decide how to work and flexible hours – are strong predictors for an employee’s sense of satisfaction. 

This likely won’t come as a surprise for HR practitioners, with flexibility highlighted time and time again not just for its impact on employee engagement, but its connection to uplifting participation in the workplace and wellbeing outcomes.

More and more employers are putting these into practice, with almost half of employers reporting that they would like to see the right to request flexible working extended to all employees, according to research conducted by AHRI in April 2025.

The most effective flexible policies are those that are organisation-specific and reasonable, says Dr Ballard.

As the majority of employers will continue to operate under hybrid work arrangements into 2026, building cultures that normalise sustainable workloads is equally important – one in which behaviours align with policies around flexible work.

“The work that needs to be done is often fixed, and the people who can do the work are often fixed. That’s where it comes back to how the work is done because it’s often the easiest thing to change.” – Dr Tim Ballard, Senior Research Fellow, University of Queensland

Dr Ballard notes that flexibility and autonomy shouldn’t supersede the requisite support required to help employees perform.

“It should be about empowering employees… and giving employees the latitude to make decisions for themselves, and take responsibility and accountability.”

Keeping stress in check

Unsurprisingly, stress, job insecurity and work intensity exert the greatest downward pressure on an employee’s sense of job satisfaction.

With these findings in mind and increased legal scrutiny over an employer’s work health and safety obligations, it’s more critical than ever that adequate support structures are implemented.

Stress-related factors are particularly apparent in industries that have high levels of burnout, such as education and training, notes Dr Ballard.

“What we find is that a lot of the industries which are perhaps less satisfied with their pay than you’d expect, given how much they’re getting paid, also tend to be industries where stress is higher.” 

Assuaging these concerns comes back to macro-level organisational interventions such as effective job design and increasing employee’s sense of autonomy over their work, says Dr Ballard.

“Organisations might be able to hire more people to share the work load, but oftentimes that’s not the case. 

“The work that needs to be done is often fixed, and the people who can do the work are often fixed. That’s where it comes back to how the work is done because it’s often the easiest thing to change.”

For instance, examples of an effective work design approach includes:

• Growing capability among leadership: Managers play a key role in monitoring for unsustainable workloads and ensuring teams have the resources and clarity they need to carry out their work.
• Co-designing with employees: Engage your workforce on decisions that affect their role. Consultation with your workforce, through weekly check-ins and organisational-wide town halls, is critical to uncovering potential hotspots and ensuring solutions are serving people that they have been designed to target.
• Embedding inclusion in work design: Incorporating a DEI perspective to job design through practices such as autonomy and flexibility, ensures everyone’s needs are reflected in policies, systems and processes. Read more on how this could work in practice in this previous HRM article.

By structuring work in meaningful and sustainable ways, communicating transparently over pay and enabling autonomy where reasonable, HR can help create workplaces where people feel supported and engaged – a critical challenge for businesses entering 2026.