What Makes a Great Job: The 3 Main Factors of Job Satisfaction

What is a “great” job? 

Over the course of my career, I’ve developed a quantitative way to measure job satisfaction that will help determine whether you’re in a “good” job, and if you’re not, why. You don’t want to be in a “not good” job when you could be in a “good” job. Unless you enjoy pain. We will address that below as well, since your definition of a “good” job is going to be different than someone else’s.

If you’re a manager, this is a great way to evaluate your job offerings to ensure that you are competitive in the marketplace. Do you have high turnover? Does your company feel like a revolving door for new employees? This can help you figure out why.

In my opinion, the three main contributors of job satisfaction are:

1. Compensation
2. Work Environment
3. Engagement

Each one of these categories comprises a variety of factors, which we’ll explore in-depth below. 

Compensation

Compensation is the main (and often only) factor that a company will look at when determining job satisfaction for employees. After all, it’s because pay is on the top of everyone’s mind. Is employee #248 not happy? “Oh, that’s probably because they think they aren’t paid enough,” you might say. (Side note – don’t refer to your employees as only numbers; they’re people. More on that later.  In fact, their unhappiness could be because you don’t know their name, or at least that could be a contributing factor.)

Here are some of the main contributing factors to an employee’s overall compensation:

• Salary/Wages
• Benefits Package (health, 401K, vision, dental, etc.)
• Stock Options/Company Ownership (equity)
• Reimbursements (commuting/gas cost, cell phone plan, home internet plan, etc.)
• Bonuses
• Company Gifts
• Perks (free gym membership, museum passes, etc.)

It’s important to consider the many compensation factors offered when evaluating your overall compensation. For example, if you take for granted your current company’s excellent health insurance package, you may find yourself shocked at how much of your salary goes to paying for health insurance at your next company. For example, an $8,000 increase in salary at your new company doesn’t even offset the $10,000 in additional cost for health insurance at that company. 

You just accidentally took a pay cut. Congratulations. 

Put a dollar amount value to your entire compensation package when comparing multiple companies/job offers.

Work Environment

Some of us could work all day every day in a cave with no light, chipping away on stone tablets by torchlight. In modern days, we call this working in an “office”. Dim LED lights illuminating spreadsheets. For some,  it can be the greatest thing ever.  Unfortunately, it’s a near-death sentence for others. A friend of mine once said that he’d rather die than work at a desk. In his case, I believed him.

Here are some of the main contributing factors to an employee’s overall Work Environment:

• Manager (how do they treat you, what’s their management style, level of respect, etc.)
• Number of Hours Worked per Week
• Coworkers
• Physical Work Space (Standing all day flipping burgers, a desk with no natural light, a chair with no lumbar support, home office, etc.)
• Physical Work Space Perks (snacks in the kitchen, lounge chairs, arcade games, pool/foosball tables, hangout rooms, etc.) 
• Office “Culture” (amount of meetings, strictness, dress code, parties, recognition, etc.)
• Flexibility (working remotely, no set hours as long as the work gets done, ability to listen to music at work, etc.)
• Paid Time Off/Paid Holidays

Engagement

When you were a kid, did someone ever tell you to “do something you love” because “you’re going to be doing it for the rest of your life?” Or, even, “Do something you love, and you’ll never work a day in your life?” This is a pretty good summation of the “engagement” category. It’s important to understand other factors within this category besides enjoying your work as if it were a hobby.

Here are some of the main contributing factors to an employee’s overall Engagement:

• How much you love the work
• Passion (is it a good cause, do you believe in the intended outcome, are you dedicated to progress in this area, etc.)
• Fulfillment Level
• Amount of Recognition
• Learning Opportunities
• Growing Opportunities

Evaluating the 3 Categories of Job Satisfaction

Obviously there can be some overlap between these categories. You could classify paid time off as “compensation” rather than “work environment,” for example. 

So how do we do this? The key is to determine what matters to you, and then quantify it.

 Let’s say you just interviewed at a new company and took notes to see if it would be a good fit for you. Let’s look at the three factors.

Compensation is the easiest of the three categories to quantify. Convert all of the compensation items into dollar amounts, and add them together.

Compensation Example:

• Base Salary: $30,000
• Insurance Benefits: $5,000
• 401K match: $3,000
• Estimated Bonuses: $1,500 

Example Company Incorporated, LLC
Item	Notes	Amount
Base Salary	–	$30,000
Insurance Benefits	Health ($4,500), Dental (~$500)	$5,000
401K Match	Up to 10% of salary	$3,000
Estimated Yearly Bonus	“Usually around 5% of salary”	$1,500
Total	–	$39,500

Work Environment and Engagement are more difficult to quantify than compensation, but you can follow the same methodology for both. Essentially, you’re looking to put them on the same scale as compensation because that puts all three criteria on the same scale for comparison purposes, making the data easy to digest for us humans. The way to do this is to break down the aspects of these categories that matter to you and assign them a “dollar-amount” value. 

Do you feel like you don’t care if there’s an office dress code? If you don’t care, this category would receive “$0”, since it doesn’t sway your decision or perceived value. The easiest way to break this down is to list all of the factors that matter to you first, and then split $100,000 worth of value across them. This target is arbitrary, and should match what you consider to be the “possible maximum” for your compensation total. So if you think your maximum total compensation might be $180,000, you could use $200,000 as your target for “work environment” and “engagement.”

This is an excellent exercise for determining what matters most to you about a company, and you can use your findings to help you create great interview questions to ask a potential employer. (Link to article I’ll write at some point that talks all about asking good interview questions – from both sides of the table 😀 )

Work Environment Example: We’ll base this off a $100,000 scale, and you can create a similar list of factors that you care about with relative weighting. Once you’ve listed the factors that you care about, you can use them as your benchmark when evaluating a job. Feel free to use this list as a starting point.

• Manager: $30,000 (Usually the single most important factor for employee job satisfaction)
• Each hour of work less than 40 hours: $1,000 (a positive factor)
• Each hour of work over 40 hours: -$1,000 (a negative factor)
• Coworkers: $20,000
• Natural Light: $5,000
• Snack Kitchen: $10,000
• Pool or Foosball Table: $5,000
• Casual Dress Code: $10,000
• Work Remotely: $5,000
• Less than 15 minute commute: $5,000
• Ability to listen to music or check personal social media at work: $5,000
• Paid Time Off/Paid Holidays: $1,000 per holiday

So, with some of your priorities in mind, let’s begin assigning dollar amounts to your work environment. Here’s a practical example of how you’d evaluate a company for these factors:

Example Company Incorporated, LLC
Item	Notes	Amount
Manager	Some guesswork based on the interview: reminds me of a manager I had once who was fair, but strict. Won’t be my best friend, but won’t make my life extra hard.	$20,000
Hours worked per week	45 expected	5*-$1,000 = -$5,000
Coworkers	Wasn’t able to meet anyone in the interview process. Hopefully they’re not bad.	$0
Natural Light	Yes	$5,000
Snack Kitchen	No	$0
Pool/Foosball	No	$0
Casual Dress Code	Yes	$10,000
Work Remotely	No	$0
< 15-minute commute	Yes	$5,000
Music/Social Media	No	$0
Paid Time Off/Paid Holidays	5 paid holidays, 5 paid vacation days	$10,000
Total	–	$45,000

Engagement Example: We’ll also base Engagement off a $100,000 scale, and you’ll create a similar list of factors that you care about with relative weighting to use as your benchmark when evaluating a job. Feel free to use this list as a starting point.

• Work in an area I love: $20,000
• Passionate about the product: $10,000
• The work is challenging, but rewarding: $20,000
• I get to come up with creative solutions for complex problems: $10,000
• Regular notifications are sent out for notable team members’ accomplishments: $10,000
• I get to use math often (could be a strong negative for some. Alternatively, choose a skill you’d like to keep sharp): $5,000
• The company hires and promotes from the internal team often: $10,000
• I’m allowed time each month to work on personal projects or development: $10,000
• The company sponsors a learning course or program that I can take part in: $5,000

Here’s a practical example of how you’d evaluate a company for engagement:

Example Company Incorporated, LLC
Item	Notes	Amount
Work in an area I love	This is a software company, which I really like, but I’d be working in Tech Support. I’d really like to work on the Dev team. ½ points.	$10,000
Passionate about the product	Nope	$0
The work is challenging, but rewarding	Not really	$0
I get to come up with creative solutions for complex problems:	Yes	$10,000
Regular notifications are sent out for notable team members’ accomplishments	They said they don’t have anything like this in place currently.	$0
I get to use math often	Yes	$5,000
The company hires and promotes from within	They said “it’s happened” but I get the sense it’s not very frequent.	$5,000
I’m allowed time each month to work on personal projects or development	No	$0
The company sponsors a learning course	Yes	$5,000
Total	–	$35,000

In summary, this totals for this company are:

• Compensation: $39,500
• Work Environment: $45,000
• Engagement: $35,000

Is that “good”? In the next section, we’ll talk about how to make sense of the data we’ve just collected.

The Minimum Threshold

The first thing we need to explore is the minimum threshold: the bare minimum that you would consider acceptable in each category. For compensation, it’s the dollar amount that you would need to be able to pay all of your bills, housing, food, and clothing. For the other categories, there are likely several factors in each category that you would consider “deal breakers” so the sum of these would be your minimum threshold. 

Using the chart from earlier, the minimum threshold can be drawn as a line on each of the bars.

According to the example above, the “Work Environment” doesn’t meet the minimum threshold, so this job would be unacceptable.

Here are three real-world examples of minimum threshold in action.

Example 1: An old manager of mine used to call employees within his department “grunts” or “troops.” Some found this deeply disrespectful while others “didn’t mind.” For some, this didn’t meet their minimum threshold for “work environment” and quickly left the company. Takeaway? Don’t do anything that those around you could see as disrespectful. It can be incredibly costly. Treat people like people and call them by name (and definitely take the time to learn names). How to Win Friends and Influence People is an excellent resource for managers looking to work on their people skills. 

Example 2: One of my coworkers (100% remote employee) once said, “if the company ever requires me to start coming into the office, I’m going to quit. It doesn’t matter how much they pay me.” For him, working remotely should be factored into his minimum threshold. If a company doesn’t offer remote work options, then it’s an automatic “no” since they don’t meet his minimum threshold for “work environment.” 

Example 3: After the acquisition of our company, I was talking to one of the other co-founders about future plans. He indicated that he wouldn’t be able to stick around long-term because he wasn’t satisfied unless he was building something and had a large amount of control. Even though the compensation was really good for him, the new company acquiring us didn’t meet his minimum threshold for engagement. He ended up taking a large salary cut to go work at another startup.

It’s key to note that the minimum threshold can change due to life circumstances, as well as the type of job you’re looking for. If you’re a college student looking for part-time work, “engagement” and “work environment” will probably not be as important for you. You need the flexibility and hours scheduled so you can work and attend classes, but that’s about it. You likely aren’t planning on this being a long-term career, so as long as it checks a few scheduling boxes, you are primarily concerned with compensation. 

Quantifying a “Great Job” – The Stacked Bar Chart

So why go through all of this effort to assign numerical values to the contributing factors of job success? 

For individuals, this is incredibly useful for comparing the actual values of multiple job offers, evaluating the value of current employment, or determining which changes the company could make to have the most dramatic effect on satisfaction. 

For managers, this can be massively beneficial in determining the best ways to improve overall job satisfaction of employees, better retain employees, or determine why a compensation raise might not be enough for an employee on her way out of the company.

Here’s an example of how you could use this methodology to compare a job offer with a potential company to your current employment.

Suppose you have a job offer from a new company that you’re excited about, since it comes with a $10,000/year raise. After working through the above analysis, you determine that the new job, like your current job, meets your minimum threshold requirements in all three categories. You work with some of your best friends at your current company, and enjoy the recognition that you receive for your contributions. Your current company is very relaxed and has snacks and video games. The new company seems very professional, has a dress code, and doesn’t have a break room.

Writing out and charting a table for each company looks like this:

You might be surprised to see that even though your current company pays you $10,000 less per year, it could be a much better position for you with much higher job satisfaction. Especially if you could work to raise your compensation. You may be better off discussing a raise with your manager or starting a side business with the flexibility your current work provides.  

A software developer friend of mine, we’ll call him Jeffrey, left the company he worked at because he got offered a much higher salary at another company. He jumped at the opportunity and quickly turned in his two weeks notice. The new company was much more strict in its policies and the people the company attracted were less friendly on average. Also, the company was (somewhat ironically, at least at a glance) much less organized and more divided, which led to fewer opportunities for learning and growth. 6 months later, Jeffrey started trying to get his old job back, and was even willing to take a pay cut from what he was previously making at that company to do so. Unfortunately, his spot had been filled, and he was unable to return to his previous employer. Some employers (though less frequently in today’s world) will carry a grudge, and won’t accept back any former employees out of “principle” (read: “spite”).

I helped a coworker, we’ll call him Devin, work through this method to decide that a new job offer was best for him. The new job came with a lower salary and he would have to leave some of his best friends that he had made at his current company. But the new position had much higher potential, and would look really excellent on his resume as it was directly in the line of work he wanted to be in. The new company is also one of those “cool” companies, with a mission that is compelling and thousands of eager job applicants. As we worked through the numbers, Devin decided that the much higher engagement at the new company would far outweigh the work environment and compensation costs. He’s been there for a year and a half now and is loving it.

Here’s how a manager could use this methodology to determine the most cost-effective way to improve employee job satisfaction.

By evaluating what your employees perceive to be areas where your company is lacking and assigning costs to those areas, you can determine where you will get the biggest boost to employee job satisfaction for your money. 

I had recently been promoted to be the manager of the services and implementation team at a company. I sat down with each of the employees on the team in a one-on-one setting and asked them what motivated them, and what was one thing they would love to see the company implement. This was a young team of mostly-starving college students. More than half of the team told me that food was a big motivating factor. I proposed that if they met their objectives during any given week, they’d be able to have company-provided pizza at the end of the week. This was a team that very rarely met company objectives every week. I also found several team members who weren’t really motivated by anything, and wouldn’t work harder “no matter what” (their words). By removing team members who were negatively impacting the team, holding some small training sessions (4-8 hours total), and implementing pizza Fridays when objectives were met, what was the result? In under a month, we tripled production output, the company provided lunches every Friday moving forward, and the team overall was happier. When we had job openings, they’d even tell their friends, bragging that their company provided lunch on Fridays. 

What did pizza cost each Friday for a team of 25? About $50 per week, $100 if we went with higher-quality pizza. For an added expense of $5,000 per year, our company was able to motivate some hungry college students to triple their work output. Was this an increase to employee compensation? No, not really, this was more of an expense that enhanced the work environment for the employees, which led to them accomplishing more, which in turn increased their engagement.

Would $5,000 per year or even per month be worth it to triple the output of one of your teams? The optics are going to look different for your company. Maybe it’s “leave early” Fridays, some snacks in the kitchen, a pool table, etc. Ask your employees. If they respect and trust you as a manager, they’ll tell you. 

Have a Great Job

So that’s a “great” job.

Or at least hopefully that gives you the tools to figure out what a “great job” means for you. There are many things that influence overall satisfaction in any job, and it’s important to take everything into consideration. I would love for you to work in an environment that you enjoy, with people you like to be around, doing something that you care about. Here’s to pizza, a great salary, and a lifelong friendship with what’s-his-name in the corner cubicle.