Lisa Hephner

The Connection Between Employee Motivation & Company Performance

Posted by on November 28, 2011 in Tip of the Week

Think about the moment you decided to start your small business. What motivated you? Passion for your industry or craft, the desire to control your own destiny, the need to set your own schedule to balance work and family life, a sense that you had a mission to fulfill, a calling to help others, the prospect of making tons of money, or something else entirely? There are probably as many motivations as there are types of small business, and chances are your answer includes several. And, chances are your primary motivation was not making tons of money. After all, running a small business is no picnic and the tough reality is that more small businesses fail than succeed. So, there must be something more than the promise of financial reward to keep you going every day.

According to a number of studies, there is. And, it is not only what keeps you as a small business owner going, it is what keeps your employees going as well. Believe it or not, study after study has shown that for many job functions monetary incentives such as commission and performance bonuses are not only completely ineffective motivators, but they also impair performance.

Dan Pink makes this case in his TED talk, Dan Pink on the surprising science of motivation. He uses several social science and business studies to make the case that financial incentives are no longer useful for a large portion the 21st century workforce. They work very well for 20th century route tasks that require mechanical skill, such as assembly line work, but very poorly for the creative thinking required for today’s information and knowledge-based economy. Why? He posits that rewards narrow thinking and impair the creative thought-process required to excel in the 21st century workplace.

What does work? Pink makes the case that once salary is sufficient and fair, the best motivators become “Autonomy: the urge to direct our own lives. Mastery: the desire to get better and better at something that matters. Purpose: the yearning to do what we do in the service of something larger than ourselves.” Watch the 15 minute lecture on YouTube, and think about how your business can benefit from a 21st century approach to motivation.

Understanding that monetary incentives are not always useful can help you better leverage your entire team, but it is particularly important for your younger employees, many of whom have never even worked in the 20th century. (Wow that makes me feel old!) Michael Fertik’s great Harvard Business Review post, Managing and Motivating Employees in Their Twenties provides significant insight into how to motivate and develop this new generation, as well as how take advantage of their youth and enthusiasm to improve your business and your management style. He provides a number of useful tips on managing young employees from what to do on their first day, the type of management style that works best for them, the types of organizational mistakes that can ruin potential, and the best ways to merge them into an existing, and often older, team.

The end of the year is rapidly approaching, which is a great excuse to take stock and make improvements for 2012. You’re probably already putting new incentive plans in place and figuring out how to make next year more successful than this one. Think about how you’re incentivizing your team in light of Pink’s and Fertik’s ideas. Perhaps it is time for a change.

Lisa Hephner

Lisa Hephner

My name is Lisa, and I'm the Vice President of Knowledge, responsible for the management of corporate, product, competitor, marketplace, legal, and regulatory knowledge, and creation and dissemination of knowledge tools using these assets to PaySimple prospects, customers, employees, and partners.

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