What motivates employees?
For sure, having a great culture is a mighty motivator for employees, but of course it is not the only one. Essentially, there are two other ways to motivate employees: with money and without money. In this blog I am going to discuss ways to motivate with money (which is not always as easy as it sounds). In my next blog, we will look at non-financial motivators.
It is no secret that money motivates people, you know that, I know that, we all know that. Holding sales contests, offering bonuses, dangling raises—these are tried-and-true ways to motivate people. The benefits package you offer is another financial motivator, but this begs the question: Why does it take money to motivate an employee?
The answer is that the possibility of making more money transforms the employee into an entrepreneur, and entrepreneurship is based on the premise that hard work and ingenuity will be rewarded. Isn’t that how you think? “If I implement that plan, we could increase sales by 10 percent!” Well, that is precisely what an employee thinks when offered a money motivator. “If I sell more than anyone else this month, I win that trip to Hawaii!” So the secret to motivating with money is to tap into this mind-set for mutual benefit.
First, you can always link an employee’s pay to performance. That is exactly how commissioned salespeople work. Similarly, you could link bonuses to desired outcomes. For example, you might offer your director of operations a nice bonus if he can reduce overhead by 10 percent for the year. A manager might get 10 percent of any increased revenues for his store for the month. There are many ways to structure such a compensation program.
But remember, when creating a money-motivated system, it is important that the reward be linked to an outcome that the employee can control. The director of operations can directly affect overhead, but he or she cannot increase sales, so a reward based on increased sales would not work for him or her and in fact may be counter-productive. If the reward is based on overall company performance, the employee will be motivated to try harder only if he or she can affect that performance. As long as the reward and the desired action are linked, the motivation will be there.
Finally, let’s look at contests. Contests have been used to motivate employees for ages, and for a good reason – they work. Contests build excitement and create desired behaviors and outcomes. The secret is that the best contests
- Use realistic and achievable goals
- Are limited to a short period of time
- Have desirable prizes
- Link rewards to performance, and
- Have uncomplicated rules
So yes, motivating with money works, and works well, but fortunately, it is not the only way to motivate people. Read my next blog to get some good ideas of non-financial motivators.