How to keep staff happy - without (necessarily) paying everyone more

ONE PERSON WHO is a poor fit can have a hugely negative impact in a small organisation.

For that reason, finding the right people – and then keeping them happy and holding onto them – is crucial to the success of an SME.

Let’s look at the ‘keeping them happy’ part. In his brilliant but short book for TED, Dan Ariely, a leading behavioural economist, suggests a hypothetical equation for motivating people that captures how complex a process it can be:

Motivation = Money + Achievement + Happiness + Purpose + Sense of Progress + Retirement Security + Caring About Others + Your Legacy + Status + Number of Young Kids at Home + Pride + (All Kinds of Other Elements)

Great in theory, but day to day there has to be an easier formula. What practical steps can you take to help motivate your staff?

Money, money, money

Money is important, and of course it plays a part in keeping people motivated. But is it the key factor?

A review of the evidence shows that the overlap between pay and job satisfaction is less than 2% and Gallup polls consistently show that there is no significant difference in people’s engagement by pay level.

So yes, pay too little and people will be dissatisfied, but don’t assume that paying the market rate or even above it will motivate employees to go the extra mile.

Bonuses

What about bonuses then? Bonuses can be an effective way to motivate sales staff, but they need to be carefully designed, as financial incentives can often backfire.

For example, setting monthly quotas can encourage sales staff to rush leads that are not fully developed and offer up too much in negotiations at month-end, damaging revenue.

Make sure you are rewarding the right behaviours. Therefore, cumulative targets may work better. This means if a salesperson misses their target for the first month, they can still get a bonus if they make up the difference by the end of the second month, motivating them to keep selling.

Gratitude

A recent survey highlighted that over a third of Irish employees (38%) say they don’t feel appreciated in their workplace, while surveys from Mazars consistently find that a lack of praise and recognition (59%) is the highest demotivating factor for Irish employees.

Thank people. Writing simple, but meaningful, personalised notes to employees thanking them for their effort can motivate staff to engage with their work.

Purpose

People are much more likely to feel motivated when they feel that their work has purpose. Ensuring people feel that their work is purposeful is especially important when projects fail or need to be abandoned.

Offering employees the opportunity to give presentations about their lessons from a project, for example, or use lessons from a failed project to find a better way of doing something – these approaches are highly motivating.

Giving people time to work on socially purposeful projects can also help boost motivation. For example, one UK research firm has created a social-research fund which allows people to carry out research they feel is socially important, but may not be commercially viable.

Allocating time or money to allow employees to carry out socially purposeful work can increase their sense of purpose and keep them motivated.

Companies that consider the social and psychological factors that motivate staff and build cultures that focus on more than just financial reward are happier and more productive places to work.

Karl Purcell is a behavioural economics consultant with Carr Communications’ behavioural economics and sciences team. He will be delivering training on how leaders can communicate to motivate their employees on 21 June.

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