Want To Keep (And Motivate) Your Best Employees? It's Not About The Money

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Anita* was a model employee. As CEO of my previous tech company, I had hired her to take charge of our bookkeeping and administrative affairs. When Anita came aboard, I asked what she wanted in order to feel fulfilled at work. "Harish, I want to do such a great job that you'll want to pay me a six-figure salary and feel great about it." This was a bit of a stretch—it was hard for me to conceive of bookkeeping as a six-figure position. After doing the math, I saw how with the right mix of hard work from Anita and better systems, she could indeed earn a justifiable six-figure salary. I wrote a work-incentive plan that had Anita making her target salary after 18 months, if she hit the right benchmarks. "You'll be worth every penny if you make these goals," I told her. I gave her a lot of autonomy and leverage to get her work done well. Anita exceeded expectations, and hit every one of her targets within 14 months instead of 18, earning the six-figure salary she richly deserved. A success story, right?

Sadly, no. Two years after her initial success, Anita was fired. Despite clear subsequent targets and pay incentives, along with new assistants to support her, Anita’s ability to deliver declined. The once-star employee had deteriorated into an employee who filled only the basic job description and fought with me over minute details of her work plan, just so she could claim the monetary incentives. What happened to Anita? It took me several years of making the same mistake with others to figure this out. And it happens in all sorts of places, not just in entrepreneurial startups.

Archan* is a a guy that I've worked with in the past and think highly of. Archan just quit his $150,000+ per year job as a full-time search-engine expert for a well-known and growing web company. He had been working in his spare time for more than a year on a brilliant mobile app, something that could be a boon to business travelers. Archan had finally raised enough money to pursue this more fully. What did he have to lose? "If my product's not a success," he said, "I can always go back to the corporate world and get a job pretty easily."

Archan’s quitting represents the same category of mistake I made with Anita a few years ago, and both are insidious because they represent a failure of understanding on the part of both parties—the employee and the employer. It represents a failure in relationship-driven leadership.

At the core of these failures is how leaders and entrepreneurs, and employees in turn, typically ask for accountability and are then rewarded. Money is the carrot (or some proxy for money, like vacation time, or a trip, or a bonus, that sort of thing). That works in an industrial operation where there are fairly time specific goals to be achieved.  But the reality is, money isn’t as important as the relationship. This charming and insightful video from RSA talks of the research underscoring why this true. The long and short of it is, "pay enough so that money isn’t an issue, then give your employees high recognition, autonomy, and the opportunity to learn and grow," and watch them excel. Reflecting on this, I immediately understood my mistake with Anita, and I’ve started to see more of these mistakes in others today.

The six-figure salary threshold Anita wanted was the level at which she stopped worrying about money. Sadly, though, both Anita and I were conditioned to think of money as the main motivator, so we wrote her subsequent work plans with money as a continued focus. Had I known about the research in the video, I would have changed Anita’s work-incentive plan and oriented it towards those factors.

In my new company, I emphasize a relationship where I'm supporting the growth and personal goals of each team member, like getting them to a point (since I can’t always afford six-figure salaries for all!) where a team member is achieving compensation where they feel secure, and then spending a lot of time insisting on learning and growing, recognizing them for their results, and giving them the space to fulfill some of their entrepreneurial visions. I adore working with entrepreneurs and try hard to find those people who have big ambitions.

What about Archan? This one’s a little harder. Archan has a brilliant mobile app idea and demo, but all brilliant ideas and demos are worth little without execution. The missed opportunity is that his mobile app concept is aligned with a forward-thinking strategy for his old company. They could have both grown together. Unfortunately, as Archan himself told me, "My old company doesn’t care about me and my work, they just care about meeting short-term revenue targets." Although it made sense for Archan to leave and pursue his dreams, the alternative would have been for Archan to find a way to stay in his old company and bring his mobile app to the table there in some sort of symbiosis. Sure, this is a stretch, but a workable one.

In the past year, I've had a half dozen of my friends quit or prepare to quit their jobs in a bad economy—well-paying, high-profile positions—to pursue their entrepreneurial vision. These friends have all contemplated taking tremendous risks and are brave to face the high odds against success. I'm feeling sad that each, had they had had a better relationship with their companies and comrades, could have found success and support for their visions within the context of their old companies.  

I’ve changed the way I operate, and I’ve been (so far) successful at supporting the entrepreneurial visions of the people I’m working alongside, going so far as to keep them on payroll and working and making introductions to ensure the success of their product idea. I’m also trying actively to find ways to integrate what they want to do with my company’s services and products. I figure that if they’re stronger, have autonomy, and are learning and growing, their being successful will ultimately help me. This has been a difficult and uncomfortable shift in thinking, but so far, it’s been good to see the results. My work is more meaningful, and more profitable, as is theirs.

*Names have been changed.

[Image: Flickr user Anssi Koskinen]

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58 Comments

  • ZippleinIndy

    Zero comments, Harish.  You got this posted on Fast Company and you got zero comments...well, one.  

    I'm going to share a little secret with you Harish.  It took me 30 years to learn this.  This secret explains why talented individuals don't hang around.  It is 100% Truth with a capital T.

    Corporate America is a wasteland, populated mostly with people who make all their important decisions out of fear.  They're afraid of the boss, the customers, the suppliers, Arnie in production, their quarterly review, the CEO, the HR lady in charge of sensitivity training, etc.  These well educated monkeys, when they are most fearful, act arrogant.  It's how they cover their fear.  They act as roadblocks and obstacles to innovation (ie change, which creates more fear).  

    Who needs that nonsense?  If you really want to motivate employees, get out of their way and let them run.  Read a little Tony Hsieh.  Try to grow up, or quit.  I wish the little girl running my department would. 

  • NYC65

    This is a terrific article. Zip, before you get super sassy and cynical next time, you should realize that FC deletes all the comments at the end of each year.

  • Eva Rinaldi

    Sometimes it is, though. If your employees are not getting paid enough to cover their basic needs, it's probably about the money. If your employee has ever asked you to fill out a proof notice so they can get food stamps, it's about the money. If you have an hourly wage employee who works less than 20 hours a week, it's about the money. If you have an employee who has a chronic illness in their family and you don't offer health insurance, it's about the money.

  • Jeanine Broderick

    I agree with you on the first and last item but the 20-hour a week employee maybe and maybe not -- my daughter is a college student who works for spending money --- all her other needs (tuition, housing, transportation, food, etc. are covered).  For her it is the flexibility and not being scheduled when she has other commitments - classes or sorority activities with mandatory attendance requirements.  I have also known many individuals in my life -- they have usually been women in the younger years - but men who have retired from their main occupation now do the same - They are working to have something to do outside the home.  

  • Summerjobs

    Great article. Dan Pink wrote a book a couple years back called "Drive" that talks about what truly motivates us. You just cannot throw money at the problems anymore. 

  • Gary Cattermole

    An insightful and interesting article.

    Similar to Daniel Pink's DRIVE message - money stops being a motivating factor once the employee stops worrying about money.

    Gary Cattermole
    Partner - The Survey Initiative
    http://www.surveyinitiative.co...

  • Teresa Bruneau

    People want a more healthy work/life balance. When they are working in a position/role for someone else's (some company's) goals/vision/dreams, they will tire of spending 40+ hours a week of their best mental energy being subservient. 

    I say 40+ b/c it's never 40 hours, EVEN when their timecard says 40 hours. Take into consideration waking up and dressing professionally, the commute to drop kids off at daycare, commute to work, having to stay around work for the lunch hour, then the commute back home. No wonder they will burnout b/c it really ends up being around a 55-hour week. They think change will be found at another company. But it happens again. 

    I know the work week has to decrease from 40 hours to 30, which according to my calculation above really ends up being 42 hours. There are only so many mental hours a person has to give to work when work is uninspiring to them.  Having more autonomy and independence about their day in their work life makes them more productive and energetic at work. For instance, I believe Tiimothy Ferris said in his book "The Four Hour Work Week" something like, if you are given 1 day to say 'write a paper', you will take the whole day to write the paper. If you are given 3 hours, you will write it in 3 hours. I think the work week is the same, employees KNOW they have to stay at work for 40 hours, so what they COULD finish in 25 and go home after they finish, takes them 40 hours! What a motivator and novel idea, to be able to leave work when you are finished with what you need to do for the day... 

    I've just began a blog writing exactly about the work/life balance at http://www.ijuxtapose.blogspot.... This is people's lives employers are dealing with, they only have so much time on this earth.. When you create positions at your company, keep in mind the human side, b/c you will win everytime. You want someone to stay working for you, and I really think employers need to stop treating them like children, throwing 'crumbs' their way to appease them... forbidding them to leave work, forbidding them to have more than a few paid time off days during the year, PENALIZING them for missing work. It's realy atrocious. No wonder there is high turnover.

  • Akilah t'Zuberi

        On September 3, 2011, the New York Times published an article of the results of research on workplace misery by Theresa Amabile and Steven Kramer; the article’s title “Do Happier People Work Harder.” The researchers found that workers, across all income levels, all professions, were more miserable than ever. They went on to note that the situation is not likely to improve anytime soon. I think that conclusion speaks to the despair of those who want to solve this problem. 

       The article went on to quantify the impact of “workplace misery:” a whopping 300 billion in the US in lost productivity. Workplace misery costs the global community about 500 billion. Yes. This is a problem around the world. But the US is leading with the highest number of miserable workers. Part of that 300 billion goes into studies, which produce the same conclusions: Workers are miserable; they are disenchanted with their salaries their responsibilities, their co-workers. So what’s new? 

       The article continues with the researchers efforts to uncover the causes of worker misery. They looked at what they called the “inner work life.” Workers were asked to keep a journal documenting the outstanding events of the day, and how they responded to those events. They found that what was going on outside of the worker and how she responded to it had an impact on her work. How anyone responds and reacts to external events has only to do with their perceptions of what it is she is looking at.  There is no way that any employer, CEO, manager or supervisor can control external events for any employee in an effort to insure that her work is not impacted by those events. 

       Second, to study an employee’s reactions and responses to external events is only studying, once again, the effects of worker misery. 

       Third, the problems that we are faced with at this critical juncture, with the environment, health care, security, education are not issues which call for reactions and responses. These are issues which call for creativity which is arrested by the reaction and response mode. 

       Yesterday, September 20, 2011, the USPS announced their efforts, along with the federal government, to save the postal service. Many may not remember when there was a time when the post office was in the news every other week or so. Why? Some disgruntled employee had been fired, or reprimanded, and took her frustrations out on the supervisor or manager, sometimes the whole office. It is where we get the term from “to go postal.” The USPS took steps to clean up its name. Now, when someone is fired or reprimanded it is done in the presence of an armed guard. No longer does the manager have the responsibility for delivering the words “you are fired” to an employee. This is the business of an outside consultant. How much this is costing the USPS? A lot. 

       This is how the USPS addressed the issue of workplace conflict. Well, no one can work under fear or threat. Certainly the presence of armed guards increased, not decreased, the misery. Of course, misery always stifles creativity. If the USPS would have addressed the cause, and not reacted and responded to effects, the employees would have themselves, through their creativity, made the USPS a vibrant, viable, and prosperous, I might add, US business. Yesterday they announced that more than 50,000 people would be laid off.

       So, what is the cause of worker misery: simple, it is the absence of happiness. Businesses and corporations can throw billions at studying this problem. They can offer workers pay incentives, bonuses, and whatever other forms of bribery they can muster. Supervisors and managers can encourage and motivate to their heart’s desire. But no one can alleviate workplace misery but the worker. If we could get the workers to do this, if businesses could understand that an unhappy worker is not their fault or their responsibility, we could use that 300 billion in lost productivity and studies to put art and music back in public schools. But what would even be better is that American businesses could take their place in the leading edge of the global shift in consciousness.

    Dr. Akilah t’Zuberi

    Author- 16 Mondays: for

    people who hate their jobs

       

  • Jeanine Broderick

    You are spot on that an employer cannot control external events but what they can do is provide training to employees to manage their own happiness level.

    It has been proven that the old myth of "we are born and destined to remain either an optimist or a pessimist" is just that -- a myth.  We are capable of changing with the right tool and skills.

    The benefits of a positively focused and optimistic workforce are enormous.  Increased productivity, less absenteeism, increased engagement and morale, increased cognitive ability, and much more.  

    That is what my program does.  It helps individuals understand the impact of how they perceive situations and provides them with the knowledge and skills to be able to self-manage their own perceptions so that the same circumstances feel better.  Two individuals can perceive the same situation so differently.  In fact, the same individual can perceive the same circumstances differently with some knowledge and skills.

    We all want to feel better.  That is a natural calling.  

    Just as the negative external situations have a negative impact on job performance, an employee who is capable of self-managing themselves to a better perspective will apply those skills to events outside the office making those uncontrollable events less disruptive not only to productivity but in the employee's life.  The employee resilience increases.

  • Teresa Bruneau

    Dr. t'Zuberi, 
    But what causes this absence of happiness? I believe it is caused by not having enough time to enjoy their personal life. When you consider that working full time is never 40+ a week, it's more like 55+ with all the commuting, dropping kids off at daycare, and getting ready-dressing- for the workday. By the time this worker gets home, they are exhausted and tired, having the left-over energy to 'enjoy their life'. Do this 5 times a week, and do it for crumbs, do it for a lot of money, it doens't matter. It erodes at a person's personal life enjoyment, and there will be burnout, it cannot be sustained. 

    On top of that, most workers are treated like children at school.... employees cannot leave until 4:30pm, employees can only take a 30 minute lunch, employees should always be working, ect. 

    People want autonomy, respect, i wrote about this in a blog i just started- How to have Happy Workers http://ijuxtapose.blogspot.com... .

    I no longer believe the work week should be 40 hours, but more like 30 to 32 but with the caveat/perk that when they finish what they need to do for the day,they can leave.  This will have a three-fold benefit: 1- it will lead to more productivity in a shorter amount of time, and 2- it will give people more personal time (think flexibility, autonomy, happier,healthier). 3- decrease in labor expenses. There would be so many benefits beyond this.... parents would save on daycare expenses for one day.  
     
    People are not robots, but our work system treats them like they are. It's barbaric and ti needs to be changed.

  • Jackie M. Briski

    First of all, great article. Management issues such as these are incredibly complex. You laid it out very clearly here in a way that's easily understood.

    I
    think this is particularly important: "The six-figure salary threshold Anita wanted
    was the level at which she stopped worrying about money. Sadly, though,
    both Anita and I were conditioned to think of money as the main
    motivator, so we wrote her subsequent work plans with money as a continued focus."
    However, it still kind of misses the point on motivation: At the end of the
    day, motivation is internally-driven. A lot of managers overestimate their ability to influence
    people.I mean, think about it. At the end of the day, if my primary
    incentive to get people to perform is bonuses/pay raises, my management
    style is essentially founded on bribery. Conversely, if my primary incentive to get people to perform is demotions/wage reductions, my management style is essentially founded on tyranny. As Harry Levinson observed, between the legendary carrot and stick (of managerial motivation techniques) stands a jackass. Leaders can't really motivate
    their followers. Motivation to perform has to come from an internal
    drive for excellence. But we can inspire them. This is the
    relationship-driven leadership you mentioned in this
    article. The relationships that inspire quality performance are built on mutual trust and respect.
    Easier said than done, but definitely worth the effort.

  • Jackie M. Briski

    (I'm not sure how the formatting on that post got so out of whack. Sorry for the difficult flow!)

  • Chris Glennie

    Interesting, but two observations:- these stories have been appearing for ages - if it's so true, why does it keep appearing as 'news'? Something's not quite right- I suggest that these stories tend to involve already highly-paid people with some entrepreneurial drive/instinct/motivation or courageTherefore, whilst evidence does show it's not JUST about the money, for the vast majority of working people, money looms so large many of these other issues are simply a theoretical abstraction. And again, in my experience, if you learn and grow in a role, someone will come along and offer more money, and only remarkable people either turn that down or don't try to bargain more from their current employer. 

  • Rae Busch

    Too bad so many companies believe they can motivate and keep workers without taking monetary compensation into account. No, it's not JUST the money. But wage freezes, pay cuts, jacking the cost to the employees of health care coverage, asking them to take on additional duties that USED to come with a higher pay scale but not giving a raise...all these kinds of things make employees want to take their skills elsewhere. And if the opportunity arises, they will do just that.

  • Anne Iversen Hansen

    What a relief to read this article! I am one of those employees, who have recently left a high figure job in a big company to pursue my own happiness and values. My experience is similar to some of yours; adjusting from working in a small innovative company to the large company that overtakes it (and makes all kinds of other products/services than the ones your life orbits around) is tough. Lots of relations, team spirit and sense of identity is lost  -both inwards and outwards among your customers. Alienation is the keyword here, and it takes a hell of a paycheck to put up with that on a daily basis! Good luck to you all - wether you are an employer trying to build a great place to work or you are an idealistic person looking for such a place.

  • nicolas vandewaele

    Hi Harish,
    I have been employed by the same company for a few years. It all began in 2005, in a small start up web company, that was successfully bought over by a telecom giant in 2007. Then again in 2008, a larger giant bought us over. I have had the opportunity each time to evolve (due to my own willingness to do so). Nowadays, I am feeling some kind of routine in my job and wish to give it an international flavor. We are a very successful, 10 000 employees type of company. Despite my attempts to make my management and HR understand where I want to go, I am not receiving any help nor proposals to achieve this goal. I do like my company and wish to remain loyal to it but can't see any end of the tunnel... I deeply regret that such large corporate organization can't accompany employees that wish to evolve, despite all the beautiful promising HR communication campaigns that promise they would to so. My post will not contribute much to the debate but I just felt like testifying how it works in real life in that part of the world:)    

  • JD

    The title is not right, you forgot the "ONLY" in "It's Not Only About the Money". But if you Want To Keep (And Motivate) Your Best Employees, you need to pay what they value. Pay peanuts, get monkeys.

    In my opinion, thanks to articles like this, big employer are thinking increasing salary is not worthy and still demand the maximum effort and knowledge from their employees but without paying it.

    The result is: same work as before but without salary increases. They think "It is cheaper fire and hire a new one than keep my best employees". I don't agree with them.

  • Mini B

    Very well written article, you nailed it!  This is very true, I would go back to my previous boss any day because of way he made the employees feel smart, important and valued.  The money would never be an issue for me, it's important for people to be happy and different have different motivations.  On the other hand my current company is exactly the opposite.  I want to work for you and do really well :)) 

  • Jason

    For a recent company I was part of the Attrition/Engagement department. I found that pay raises are great but to attain a low attrition rate the employee needs to feel desired in the company. The corporation I worked for during that time had over 50K employees in the US and our location alone had over 800-1500. 

    The problem I found when trying to reduce employee attrition/burn out was finding ways to include everyone. A company that gets beyond a few hundred employees typically only feeds on the producers yet in some cases everyone can be a producer and major contributor. If any company only recognizes the strongest performers in any type of category it can back fire drastically. 

    Imagine you are a regular employee who see's a new incentive for a week's paid vacation that does not use your existing allowance but to achieve this you have to be number 1 in the department. If you continually saw contests like this and always saw the same individual(s) winning the contests time after time, wouldn't you become discouraged in making any real improvement in your performance if you were already meeting companies expectations? This is where I came in and helped isolate this problem and found a drastic reduction in internal churn from 2.5% to 1.5% in a little over a 2 month time. 

    Its little things that make employees happy and feel wanted by the company which in turn makes everyone profitable.

  • derekirvinegloboforce

    Brilliant post - and very true. So much research has been done about employees seeking "meaning" at work. They want to know that what they do matters - to others on their team, to the success of the company as whole, in the greater world. Too often, however, management fails miserably at helping employees see that greater meaning.

    Harvard Business School has done research on this, which boils down this:
    Meaningful work
    and a sense of value within the organization are indeed powerful
    elements of employee engagement. All work is meaningful and valuable
    (otherwise, why would you be paying people to do it). The trick
    is for management to help employees see that meaningfulness and personal
    value, especially during this tough economy and often stressful
    workplace environment.

    More on the HBS research is available here: http://www.recognizethisblog.c...