Motivating Employees

November 30, 2018

 

Q. I think that motivating the people in my small business with about 40 employees is critical, but I'm struggling to figure out how to do this. They have good pay and the best benefits I can afford to give them. Still, they don't seem excited about their work. How can I motivate my people?

 

A. There are many ways to motivate employees. Compensation is perhaps the most frequently used motivator. Commission plans, profit sharing, bonus plans and employee stock ownership plans (ESOP’s) are all examples of using compensation to motivate employees.

 

Money is a serious motivator, but studies show that only the prospect of receiving money in the fairly near future is a strong enough motivator to change behavior. Once the employee receives the money; its power to motivate ends very quickly. Some studies say within a week. Further, the same studies indicate that to truly change behavior, the amount of the incentive must be at least ten percent of base compensation for the period. For this reason, we favor compensation systems with a significant variable component that align the employees’ interests with the owner’s interest. Further, the payouts should be relatively frequent (quarterly at least).

 

For sure, we all need compensation and it has the power to motivate us. However, we also want and need more than compensation alone. Our work indicates that people want to be recognized, contributing members of a winning team. This means that people want to know that the enterprise with which they are involved is succeeding. They want to know that what they are doing is contributing to that success and they want these efforts to be recognized.

 

Therefore, companies should take every opportunity to celebrate their successes. Disingenuous celebrations won’t work and if a company is underperforming, management needs to acknowledge that reality. However, even when a company is in trouble, if it begins to move in a positive direction, it can celebrate the progress. Celebrations communicate to employees that the company is succeeding, the first of the three things needed to motivate.

 

Second, employees need to understand how what they are doing is contributing to that success. How will they know this? Their manager needs to tell them. If you can’t come up with a way that an employee is contributing to the success of the company, then you should ask if you need that position or that employee. Spend the time to tell your employees their efforts are leading to the company’s success.

 

Finally, employees want their contributions to be recognized. Monetary recognition is one way. But, simply saying thank you when an employee does a job well can be powerful. Instead of speaking to employees only to correct them, catch employees doing something right and praise them. 

 

When you praise an employee make sure you are specific about what you liked and that you link their behavior to a company or professional goal. It doesn’t have to be expensive, but a well-timed gift certificate, recognition at a company meeting, extra time off, or even a sincere, “job well done” will go a long way towards motivating employees.

 

Making employees feel that they are a recognized, contributing members of a winning team will pay great dividends―you’ll have a motivated workforce. Conversely, failing to make employees feel like a recognized, contributing member of a winning team, or worse, explicitly telling them that their contributions aren’t valued can be a real de-motivator. 

 

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