Motivating People: Getting beyond money

The following article was retrieved from the McKinsley Quarterly. Civilian organizations are having a difficult time figuring out how to motivate/reward/recognize employees in a recession. It's a good look at what motivates people at work other than money, and is applicaple to a military environment.


Motivating people: Getting beyond money
The economic slump offers business leaders a chance to more effectively reward talented employees by emphasizing nonfinancial motivators rather than bonuses.
November 2009 • Martin Dewhurst, Matthew Guthridge, and Elizabeth Mohr

Source: Organization Practice

This is a Conversation Starter, one in a series of invited opinions on topical issues. Read the essay, then share your thoughts by commenting below.

Companies around the world are cutting back their financial-incentive programs, but few have used other ways of inspiring talent. We think they should. Numerous studies1 have concluded that for people with satisfactory salaries, some nonfinancial motivators are more effective than extra cash in building long-term employee engagement in most sectors, job functions, and business contexts. Many financial rewards mainly generate short-term boosts of energy, which can have damaging unintended consequences. Indeed, the economic crisis, with its imperative to reduce costs and to balance short- and long-term performance effectively, gives business leaders a great opportunity to reassess the combination of financial and nonfinancial incentives that will serve their companies best through and beyond the downturn.

A recent McKinsey Quarterly survey2 underscores the opportunity. The respondents view three noncash motivators—praise from immediate managers, leadership attention (for example, one-on-one conversations), and a chance to lead projects or task forces—as no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options (exhibit). The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth. These themes recur constantly in most studies on ways to motivate and engage employees.

There couldn’t be a better time to reinforce more cost-effective approaches. Money’s traditional role as the dominant motivator is under pressure from declining corporate revenues, sagging stock markets, and increasing scrutiny by regulators, activist shareholders, and the general public. Our in-depth interviews with HR directors suggest that many companies have cut remuneration costs by 15 percent or more.

What’s more, employee motivation is sagging throughout the world—morale has fallen at almost half of all companies, according to another McKinsey survey3—at a time when businesses need engaged leaders and other employees willing to go above and beyond expectations. Organizations face the challenge of retaining talented people amid morale-sapping layoffs that tend to increase voluntary turnover over the medium term. Often, top performers are the first to go. Strong talent management is critical to recruit new ones from, for example, the financial sector, who have been laid off from their employers or feel disenchanted with them.

Yet while 70 percent of organizations have adjusted their reward-and-motivation programs during the past 12 months or plan to do so, relatively few have gone beyond the direct management of costs. Two-thirds of the executives we surveyed cited cost reductions as one of the top three reasons for the changes; 27 percent made changes to increase employee motivation; and only 9 percent had the goal of attracting new talent. Regional differences were striking. Forty-five percent of the respondents in developing markets, where economies have proved more robust, cited employee motivation as a key reason for modifying incentives, compared with only 19 percent in the United States and Western Europe, where the crisis hit hardest.

Even though overall reliance on financial incentives fell over the past 12 months, a number of companies curtailed their use of nonfinancial ones as well. Thirteen percent of the survey respondents report that managers praise their subordinates less often, 20 percent that opportunities to lead projects or task forces are scarcer, and 26 percent that leadership attention to motivate talent is less forthcoming.

Why haven’t many organizations made more use of cost-effective nonfinancial motivators at a time when cash is hard to find? One reason may be that many executives hesitate to challenge the traditional managerial wisdom: money is what really counts. While executives themselves may be equally influenced by other things, they still think that bonuses are the dominant incentive for most people. “Managers see motivation in terms of the size of the compensation,” explained an HR director from the financial-services industry.

Another reason is probably that nonfinancial ways to motivate people do, on the whole, require more time and commitment from senior managers. One HR director we interviewed spoke of their tendency to “hide” in their offices—primarily reflecting uncertainty about the current situation and outlook. This lack of interaction between managers and their people creates a highly damaging void that saps employee engagement.

Some far-thinking companies, though, are working hard to understand what motivates employees and to act on their findings. One global pharmaceutical company conducted a survey that showed that in some countries employees emphasized the role of senior leadership; in others, social responsibility. The company is now increasing the weight of engagement metrics in its management scorecard so that they are seen as core performance objectives. One biotech company has reframed the incentives issue by putting the focus on “recognition” instead of “reward” in order to inspire a more thoughtful discussion about what motivates people.

The top three nonfinancial motivators our survey respondents cited offer guidance on where management might focus. The HR directors we spoke with, for example, emphasized leadership attention as a way to signal the importance of retaining top talent. When one global pharma company’s CEO was crafting corporate strategy this year, he convened several focus groups of talented managers to generate ideas about how to create more value for the business. With the same aims, a leading beverage company asked every executive committee member to meet with the critical people in their own product groups.

“One-on-one meetings between staff and leaders are hugely motivational,” explained an HR director from a mining and basic-materials company—“they make people feel valued during these difficult times.” By contrast, our survey’s respondents rated large-scale communications events, such as the town hall meetings common during the economic crisis, as one of the least effective nonfinancial motivators, along with unpaid or partially paid leave, training programs, and flexible work arrangements. While communication is critical, attempts to convey messages about the state of the business often have some spin, one HR director told us.

A chance to lead projects is a motivator that only half of the companies in our survey use frequently, although this is a particularly powerful way of inspiring employees to make a strong contribution at a challenging time. Such opportunities also develop their leadership capabilities, with long-term benefits for the organization. One HR director in the basic-materials industry explained that involvement in special projects “makes people feel like they’re part of the answer—and part of the company’s future.” A leading company from the beverages industry, for example, selected 30 high-potential managers to participate in a leadership program that created a series of projects designed and led by the participants. “Now is the time to swim upstream and invest more in our high potentials,” said the HR director, when launching the program this year.

With profitability returning to some geographies and sectors, we see signs that bonuses will be making a comeback: for instance, 28 percent of our survey respondents say that their companies plan to reintroduce financial incentives in the coming year. While such rewards certainly have an important role to play, business leaders would do well to consider the lessons of the crisis and think broadly about the best ways to engage and inspire employees. A talent strategy that emphasizes the frequent use of the right nonfinancial motivators would benefit most companies in bleak times and fair. By acting now, they could exit the downturn stronger than they entered it.


About the Authors
Martin Dewhurst is a director in McKinsey’s London office, where Matthew Guthridge is an associate principal and Elizabeth Mohr is a consultant.

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Notes
1 John Gibbons, Employee Engagement: A Review of Current Research and Its Implications, Conference Board, 2006.

2McKinsey Quarterly conducted the survey in June 2009 and received responses from 1,047 executives, managers, and employees around the world. More than a quarter of the respondents were corporate directors or CEOs or other C-level executives. The sample represents all regions and most sectors.

3 “Economic Conditions Snapshot, June 2009: McKinsey Global Survey Results,” mckinseyquarterly.com, June 2009.

What comes around...goes around

Here we go........think we had fun with Obamamania, well now we have Palinpalooza.

I'd like to see both sides wiggle out of this one. There is a new video out showing Palin supporters being interviewed outside her booksigning. Guess what- they really sound stupid when interviewed though becuase they know next to nothing about her policy thoughts. But they sure are wrapped up in the idea of Sarah, dontchaknow.

If your a Democrat, that proves that all Republicans are stupid. If your a Republican, it's proof that the media is out to get Palin.

But wait.....where I have I seen this before? Oh yea, a year ago. Obama supporters out showing how little they knew about him and his policies.



So does this mean the sides are even.....well I guess so. They both suck and people are easily spun up. Especially when they only talk to people they already agree with. Yelling at the opposition doesn't count as talking, by the way.

What we need is discourse. Discussion. Give and take of ideas

Middle Ground Solutions to Education

Too often we tend to think the nation is stuck on polar opposites of every issue. In reality, most people are not. Those in power are generally more partisan that the average American. Cable news tends to drive the wedges even deeper.

We need to find more good news to celebrate. When politicians begin to feel like working together provides greater advantage than simply defending their particular party agenda, things may begin to get better.

How about an issue that brings together Newt Gingrich and Al Sharpton. How about finding out it's more than just a photo opportunity. How about hearing Newt say nice stuff about Obama? How about hearing Al say that there needs to be more accountability from teachers and standards are a good thing?

The interview of these two (along with the Sec. of Education) on Meet the Press was one of the most refreshing discussions I have seen in a long time.

Visit msnbc.com for

Breaking News, World News, and News about the Economy
'>http://

Visit msnbc.com for Breaking News, World News, and News about the Economy

You Can't Scream Jihad in Crowded Chat Room

The President is demanding accountabilty for the Fort Hood fiasco. He wants to know who, knew what, and when. A question asked by many in the past few days.

One thing that people are not talking about (yet) is how this affects peoples views of The Patriot Act. Reports out now indicate that the FBI knew that Major Hasan was corresponding with a radical cleric as long as a year ago. They determined at the time that these conversations were "consistent with his research". This is fodder for ideologues on both sides. Either we missed the boat entirely on this guy or it is the price we pay for our freedom. After all, Frankiln said that a country that trades liberty for safety deserves neither. Well, I don't think it's as simple as all that.

In the past, we have traded our liberty for security. And it is true that in each case we have looked back on thoe times with contempt. First there was John Adams and the Alien and Sedition Act. A law so nice we had to try it twice according to Woodrow Wilson. Under his version over 1,000 Americans were indicted during World War 1. It went so far as to deny mail services to those suspected of dissention. FDR and Nixon also had their versions of "win the war at the cost of personal liberty" laws. For more info on this, see Howard Finemans book "The Thirteen American Arguments".

Were the laws above constitutional? That depended on who you asked and when you asked them. What made these laws so bad though, in my opinion, was not how they got the information, but what they did with it.

The fact that the government tracks emails to suspected terrorists does not bother me. I am, however, concerned with what they do with the information. It has been said that you can't yell "FIRE" in a crowded theater. Well, you can't yell "JIHAD" in a crowded chat room either.

On second thought, sure you can. You can do anything you want.

You can do either one of those things, as long as you don't mind drawing attention to yourself. There may be a fire, in that case you're a hero. You may be a terrorist, in that case you should be arrested. By shouting things like this and being noticed, you invite scrutiny. It would be wrong not to look into what is causing someone to yell.

The delimma is how do you proceed. Success in this depends on the Bill of Rights. The most important of these is the right of the free press. If the government must proceed with the understanding that it too is being watched. If the government understands that it too, is drawing attention to itself, then things are not likely to get out of control. The Patriot Act, without scrutiny is a dangerous thing. The Patriot Act out in the open can be a very useful tool.

Those on the left may say that this guy at Ft Hood should have been stopped by his coworkers. There were plenty of clues available for those closer to the situation than the FBI. Very true, especially if you look at his presentation. http://www.washingtonpost.com/wp-dyn/content/article/2009/11/09/AR2009110903618.html

These same individuals, however, would have been the same folks to claim profiling had anyone stepped in to intervene, say, a ten days ago. Essentially, political correctness led to inaction by both the federal government and his colleagues.

I don't believe this was a complicated terrorist plot. I believe this was a man with way too many issues to deal with and nowhere to turn. Physician heal thyself is easier to preach than to practice. He wanted out of the military and used his faith as a tool. This led him to the Cleric that then fed on his weak mind. The actions of Hasan are similar to a miltiary member that uses the "don't ask, don't tell" policy to avoid deployment. Desperate times call for desperate actions, in the minds of some. This was a weak-minded, confused individual that could not deal with his problems. He got a gun and committed horrible crimes and should be held accountable.

One thing to ponder: If the government had acted on the information they recieved (ooh-rah Right Wing Patriot Act people) and they had linked it to his ownership of guns (ooh-rah Left Wing Gun Control people) and prevented this, who would get the credit?

Ultimately, this shows that there is a need to protect the people from terrorists and crazy people in general. The pendulum of liberty and security will never stop swinging back and forth becuase circumstances in the world always change. The most important thing to ensuring both liberty and securtiy is a free press, critical of the government and all those in positions of power.

FL, MI, the DNC, & Hillary

Yesterday the DNC decided to seat the delegates from Florida and Michigan, each with half a vote per delegate. This because they (particularly Michigan) violated party rules by holding their primaries early.

It is interesting that the Clinton camp has been outspoken about the need to ensure these votes are counted. Interesting because when the rules were announced both parties supported them. If Hillary had truly been concerned about the votes "counting" she could have said so before the primary. An argument at that time would have been one based on ideology and substance.
As it stands the the same argument being made now is because she is losing. This begs the question: Does she really care about the votes being counted? If the roles were reversed would she behave any differently than Senator Obama?

I see a similar vein running through her argument for a "gas-tax holiday" proposal a month ago. She made a big deal about how it was exactly what the country needed- a reduction in gas tax from Memorial Day to Labor Day. Well Memorial Day has come and gone and she did nothing about it. No bill was introduced, no meeting was held, no explanation given. She simply framed an issue and tried to make Obama look bad for not supporting something that was never going to happen.

To me these two issues refelect a systemic process of saying things that are good for her at the time they are said, even if they are untrue, impossible or even unethical.
Senator Obama says he wants to change the way the game is played in Washington. Senator Clinton is just one example of what he is talking about. I hope he can do it.