Enough to call the salary and bonus motivation

2024 Author: Malcolm Clapton | [email protected]. Last modified: 2023-12-17 03:44

Typically, managers think that to motivate employees, they need to regularly raise wages and pay bonuses. And if there is still a motivation system in the form of KPIs and goals, then you can do nothing at all. But such a system does not really work and, without proper management, causes irreparable harm to the company.

Why doesn't money work?

Let's start in order. Where did the idea of money as a way of motivation come from? The answer is simple: from the poor past of our parents. The lack of money created big problems in the life of a Soviet person and severely limited his opportunities. When the USSR collapsed, things generally worsened. People did not even have enough money for food, so they were ready to go to any lengths to somehow improve their situation: they went to trade on the market, worked two shifts instead of one, read books at night and did coursework to get a second education in their profession. which was now becoming in demand.

Money here was a powerful incentive to move forward. It is an incentive, not a motivation. This is well explained by Maslow's pyramid or Herzberg's theory. Both speak about the following: lack of money creates dissatisfaction, which a person seeks to satisfy.

It's like a bad tooth: while it hurts, there is a great incentive to remove the pain. But as soon as the pain goes away, further interest in treatment disappears completely.

The same thing happens with wages: as soon as they reach a certain comfortable level, dissatisfaction disappears and a further increase in wages no longer creates an incentive.

According to my approximate calculations, this happens with a salary of $ 500, if a person does not rent an apartment and does not have regular payments (for Moscow - $ 1,000). For a family man, this amount is approximately $ 1,000 (for Moscow - $ 1,500).

It is worth making a reservation here that a mortgage or other obligations allow a person to return the incentive, since a mortgage is equal to a decrease in wages. That is why many companies are willing to give various kinds of employee loans or loans.

Why do companies continue to raise salaries and give bonuses?

It's actually very simple: they don't know any other way to manage employees. In addition, in certain cases described above (loans or low wages), it really works. True, not the maximum possible.

How does the increase in salaries work for people?

Often, while having no real impact on employee motivation, higher salaries still have a different effect on the company: they keep people from leaving. That is, wages actually perform only one function: it makes a person return to work. The higher the salary, the more a person is ready to return to a job he does not like. Why? Because it is already becoming difficult to find another job with the same salary, and no one wants to reduce the usual standard of living. So people quickly burn out and sit in gold handcuffs.

So what increases people's motivation?

There are several factors that actually increase people's desire to do better, and they all lie outside the plane of money. These factors were identified in the course of a large-scale study by the Gallup Institute, here they are in my free interpretation:

• Having clear goals. It seems trivial, and it seems that Peter Drucker bequeathed to all managers to set goals for their employees using the SMART system. But, according to my observations, only about 20-30% of employees have clear annual goals.
• Understanding the importance of your work. Saint-Exupery said that you don't have to make people fell trees, saw logs, carry boards, hammer them together and glue them together to build a ship. Better teach them to love the sea, and they will do everything themselves.
• Availability of resources for work. Imagine a lumberjack who gets a job and waits for his saw for a couple of days. They bring him a saw, but it turns out to be stupid. He has been looking for a saw sharpening workshop for a long time, but in the end he is forced to sharpen the saw on his own. When he finally reaches the tree, he discovers that the saw is not the right size and is generally designed for two people.
• Having friends at work. The lowest morale in teams with high turnover: people do not have time to work together, let alone make friends. But the strongest teams are those where employees are more than just colleagues.

• Be in the right place. Each person has his own talents and is most effective where his talents are involved. Why do we regularly read stories of geniuses who were kicked out of schools, institutes and jobs? These places just didn't tap into their talents.
• An opportunity to develop both professionally and personally. According to the theory of happiness, one of the most important factors for a person's happiness is a sense of their progress.
• Recognition of achievements. Do you know why millions of people play computer games? It's very simple: games can recognize achievements. Ratings, points, leveling up characters or cars, badges, victory scoreboards after a battle and other signs of achievement make people sit at the screen all night long. By the way, this is how business gamification was born. Moreover, prizes and bonuses, in the absence of other things, serve the role of recognition of achievements. And here the purchasing power of the premium is not so much important for a person as the fact of expressing gratitude.

What about money then?

The question arises: is it possible to pay money below the market average, not give premiums and just follow the advice of the Gallup Institute? Not certainly in that way. And precisely because the alternative to high salaries and bonuses requires a high-quality HR system, time and ingenuity, not everyone can implement it.

Let me give you a simple example. Imagine yourself as a student choosing a job. Before him offers from three companies:

• RichCompany offered the student a salary of $ 1,000, while the market average was $ 500. All students want to get into this company.
• SmartCompany offered the student a salary of $ 700 + insurance + mobile compensation + auto + additional 10 days of vacation + free meals + gym fees + English tuition. The student figured that if he paid for the insurance, car, meals and other benefits himself, they would cost him $ 500 a month. Therefore, he estimates the total package at $ 1,200, although we know that thanks to the discounts the company spends only $ 900 on his package.
• EffectiveCompany offered the student a salary of $ 500 + English tuition and insurance. There are few benefits, the student estimates the package at $ 700, but there is one thing. This company promises a unique atmosphere where employees are very enthusiastic about their work, a system of career growth and training, where in exactly one year the student will be able to receive $ 1,000, and in two years - guaranteed $ 2,000, and this is confirmed by real examples of the student's acquaintances. In addition, it is difficult to get here for a non-initial position, since the company fills 50-70% of vacancies with internal candidates.

The student chooses a third company: he votes for his future. The third company spends only $ 600 on the student package, and invests the savings in the development of products and people.

It is the construction of a third company that requires strength, desire, and skill, so it is always easier to follow the scenario of the first company.

Where do you work?

I can say with 95% certainty that you work for the second or first company. With about 50% certainty I can say that in the first one. And if it is the first, then with an 80 percent probability the salary there is not so high. That is, companies follow the first scenario, since there are many of them on the market, and only because of this they can still hire people, but they are famously bypassed by the second and third.

By the way, third companies are all kinds of startups and personal entrepreneurship, when you are your own investor and an employee in the role of director.

conclusions

If you are a leader, focus on the factors that really affect motivation. If you are an employee, look for the third type of company, and you will forget what burnout and depression with stress are.