Motivating Employees in a Down Economy

“If you give me a raise, I will work harder and smarter.” This is the employee equivalent of “I’ll respect you in the morning,” or “The check is in the mail.” If you are trying to motivate employees by using the carrot approach, it won’t work.  In a difficult economy, when your small business may not be able to give raises, or increase employee benefits, how do you motivate employees?

I’m not saying you shouldn’t give people raises.  If you want to hire and keep good employees, you will have to pay them well and keep giving them increases.

But don’t expect people to be motivated by pay increases, because they won’t be.  I guarantee it. I have seen it first-hand many, many times.  Pay only motivates for about 20 minutes.  Max.

What motivates employees? Back in 1968, psychologist Frederick Herzberg wrote an article in the Harvard Business Review called, “One More Time, How Do You Motivate Employees?” in which he reported the results of studies on motivation and proposed a “two factor” theory of motivation:

Hygiene Factors. These factors include company administration, physical environment (size of office, for example), relationship with co-workers, and pay and benefits.  These factors can’t motivate; they can only de-motivate.  In other words, if employees don’t have them they are unhappy, but having them doesn’t make employees happy and motivated.

A perfect example of how hygiene factors don’t motivate: In a company I know, the employees kept whining that there were not enough parking spaces.  Whine, whine.  So the company created more parking spaces, hoping the employees would stop whining and get back to work.  The employees didn’t whine, but their productivity didn’t increase, either.

Motivators. The factors that truly motivate are internal, rather than external, Herzberg believed.  Like achievement, recognition, the work itself, promotion, and growth in responsibility. As I said, these are internal.  They come from the employees and not from what you do for them.

Think of your own experiences. Think about when you were an employee.  How long were you excited about a raise?  How long did it take for you to stop being grateful for the raise and start thinking, “Well, heck, I deserved that raise!  I worked really hard.  As a matter of fact, how come I didn’t get more?  Joe over there didn’t work as hard and he got more than I did.”  I will bet it took you about 20 minutes to go from “grateful” to “ticked off.”

Motivating in a Down Economy. So my question is: What can you do to motivate employees if you can’t give them raises or benefit increases?  Easy.  Give them what they really want anyway and stuff that doesn’t cost you much.

• Recognition. Recognize an Employee of the Month.  Give special parking spaces to employees who meet certain goals.  There are many ways to motivate by recognition.
• Growth in Responsibility. If you have high-performing employees and you want to keep motivating them to do well, increase their responsibilities or promote them.  Just make sure you aren’t making them work more hours; that can be a de-motivator.
• Make work Enjoyable. Find out what makes employees happy to do their work, and help them do it.  In another company, the business owner found that employees liked working in teams, so he gave them team training and let them go.  Their productivity increased and so did his profits.

In the past 40 years, Herzberg’s theories have been modified and criticized, but they are at their core accurate.  Employees aren’t motivated by pay and benefits; they crave recognition and enjoyable work.  It takes some creativity to implement policies to motivate employees, but in the end you will have a more productive work force for less money.

Image: John-Morgan@flickr