A company’s core asset is always its people. But like with any asset, careful management is needed in order to get maximum value. Historically successful companies have been the ones that have been able to build a highly-talented workforce, retain their employees and ensure that they remain productive and loyal. Badly-run companies often find themselves with an extremely high degree of employee turnover and a disinterested or even resentful workforce.
So how do leading companies motivate their employees? There are many methods and team tactics a company can use to motivate employees, including…
When companies run well, it’s usually great for the owners and senior managers – after all, they’ll receive dividends paid out of the distributable profits. But it can often be difficult for employees to watch this when they don’t get to share in the success. At worst, they can feel that their hard work is going solely to enrich others, at that point, they can feel exploited and often leave.
That’s why it’s important not just to pay your staff well, but to structure their compensation in a way that reflects the firm’s overall growth and each individual employee’s contribution to that growth. One simple way to do this is a bonus paid for good effort or hard work, however, if it’s wholly at the discretion of an employee’s line manager it can lead to situations where employees might resent management if a bonus isn’t paid. It is much better for there to be an automated payout, for instance, many law firms will pay a bonus to any associate who hits a pre-arranged hours target. Whilst this might not be appropriate for all professions (particularly those which don’t charge clients by the hour), it’s a good starting point when brainstorming.
Another idea is to use stock options . Tech companies such as Google or Amazon have made great use of these by handing stock options to the staff at a very early stage in the company’s growth. The idea is that as the company develops, staff will be incentivised to stay and work hard in the hope that their stocks will grow to become enormously valuable.
The time-money continuum
One of the basic truths of management is that people work in return for largely financial incentives; another one is that people value their free time. These concepts seem to be in tension, but if handled well you can make it work for your business. One of the key aspects of motivation is retention, and that works best when your employees don’t feel the need to leave your business for other similar ones. There are two major reasons people leave – for more pay, or for a good work-life balance. So when thinking about the people strategy you’ll be employing, consider which one of these – money or time – your company is best placed to give.
For example, if you’re a high-revenue company that requires a large amount of manpower, like a trading company or technology startup, then you’re likely going to be in a position where you can offer great rewards to your staff but will equally ask a lot of them. So it’s important to be realistic in order to motivate your staff, be sure to keep salaries competitive to account for the sacrifices your staff will make for the job.
On the other hand, if you’re a company which offers very interesting or engaging work but with lower revenues, don’t try competing on the basis of salary. You’ll never be able to offer salaries to induce financially-motivated staff from growth-focused firms, and to recoup your costs you’re likely going to have to put a lot of pressure on your staff, potentially precipitating them to leave. If your USP is a great quality of life, then make that central to your personnel strategy – don’t try improving revenues by slowly ramping up the amount of work you expect from your employees, or you’ll see them feeling betrayed and looking elsewhere.