The strategy and approach
One of the most interesting events for a management consultant is having to do an employee appraisal, only to find that once you start implementing the qualitative portion of your analysis (usually involving some in-depth-interviews), you have opened a can of worms!
Earlier this year, I was asked to do a gap analysis for a medium-sized company. I found that around 69% of its employees had intentions to leave the company within the following two years.
Of which, around 31% were looking to leave within the year. Twenty-five percent were just standing by to see if things were going to get better and most of them were not optimistic.
For the most part, employers are just vaguely aware of the actual climate at staff level. They cited four major reasons for leaving, among which stress is the No.1 reason.
Compensation only ranked second to the lowest, and was a far distant third among other reasons – all of which were related to the work environment and its current structure. They all complained as to what this was doing to them.
A balanced contract
Somehow, many managers who have mindsets still stuck in the industrial revolution believe that employees are bound by a simplistic “economic contract”.
As I spoke about a “psychological contract” that exists between employees and employers in a previous article, the nature of that implied psychological contract could either be economic, social, or both. There is a balance of expectations for delivery on both sides.
There is an economic premise to this contract, which is still valid, but the contract implies far more things to be delivered from both sides than just money. It is not as simple as “tit for tat”.
In recent bodies of research you would find that money, after all, is not the best motivator for using the old “carrot and stick” strategy.
The usual cycles of punishment or reward tend to have diminishing returns in the long run. A balancing of both economic and social norms is necessary for employees to remain motivated, productive, and loyal.
Dan Ariely in his book Predictably Irrational explains the power of social norms and its effect on motivation.
I quote: “There are social rewards that strongly motivate behaviour – and one of the least used in corporate life is the encouragement of social rewards.”
“Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but most often more effective as well.”
While reading the book and remembering talks with my cousin in the US military, I found that levels of dedication and selflessness do not equate to their levels of monetary compensation.
Officers in service of their country are often prepared to go beyond the call of duty in heroic acts of selflessness, in difficult environments under unimaginable physical risks.
Soldiers, fire fighters, and police officers would literally risk life and limb for the fulfilment of their duties, not because of money, but because it is expected of their roles. In these examples, social norms outweigh the monetary equivalent.
The congressional medal of honour is worth more than its weight in gold. While monetary rewards usually accompany social recognition such as prizes and awards, the latter often outweighs the former and has a much longer term impact for the public and the person who is being awarded.
The recognition for fulfilling a “social contract” is often very difficult to evaluate in monetary terms as it is usually “priceless”!
Money changes ‘everything’
On the other hand, we could also contrast the practice of many companies who give exorbitant cash bonuses to their officers.
Knowing many of them, I could not help but also observe that the larger sums of money every year do not equally equate to greater levels of satisfaction.
Greater sums usually fail to satiate their employees. Worse, employees tend to believe that these monetary rewards are transactional and impersonal in nature.
It has less to do with their personal contribution but rather what they produce for the company. In the end, it does not equate to satisfaction or loyalty.
In reality, levels of happiness are usually tied to the amount of social recognition derived. Unfortunately, the costs to motivate them seem to go skywards in a vicious cycle only for outsiders to see that the core need is, after all, pride and social recognition.
People genuinely want to be proud of what they do. Surely a company could be more creative.
This is not to say that money is not at all important, but employers must realise that people’s needs go much further than that.
Should I stay or should I go?
In a very well researched book by Gallup called The Human Sigma, there are several steps to employee engagement and questions must be answered in steps leading to the top of a pyramid.
At the base of the pyramid you have level one, and it goes on by asking questions from the employee’s perspective, such as:
1. What do I get?
- Materials, compensation, equipment?
- Do I know what is expected of me?
2. What do I give?
- Company encourages development.
- Recognition from superiors.
- Do what I do best every day (mastery).
3. Do I belong?
- Do I have a best friend at work?
- Do I have common vision and values with this company?
- Do my opinions matter here?
4. How can we grow?
- Learning opportunities.
- Growth and personal progress within the last six months.
- Am I getting the most out of my stay?
Having mostly negatives to these questions usually serve as a predictor to whether or not an employee would be motivated and stay.
In the case of the medium-sized company I spoke about, the principals and partners simply started engaging their employees by talking about their careers. Some were rewarded and recognised publicly in an event with an all-expense paid vacation abroad.
Needless to say, the gesture of giving someone a gift and recognition could be worth more to the recipient than its actual cash value.
After all, the managers did go through the trouble. Maybe they do care? Perhaps they would stay?
Originally published in The Star’s MyStarJob pullout on 4 October, 2014.
John Walter Baybay is a regional management consultant who has worked more than 17 years in the areas of corporate strategic planning and economic planning. He is a competitive athlete who balances his time between business coaching, family and working with communities. Contact him at email@example.com.