Category Archives: HR

Your employees don’t want your money

Your payroll cost is probably one of the largest items in your P&L on a monthly basis. It is critical for the profitability of your business to keep the cost down, yet your employees seem to always request for another raise in their salary. Is money really the only thing in your employees mind?

More MoneyThe answer – unsurprisingly – is no. People are motivated by different things, and money is just one of those. As a matter of fact, it is not even money per se, but what comes along with it: The ability to buy better things, prestige, status. And having status is important for many or most people. For employees whose first job this is, they may have to justify to their parents how much salary they are getting. Married employees may be questioned by their spouses, and “buddies in bars” may boast about their take-home pay.

But it is not money by itself that people really want. What they really want, is to feel good. And money allows them to potentially achieve this objective. If I get more money than my neighbor in my job, I feel good about myself. If I can prove that I have sufficient income to afford a nice vacation, I again feel good. But “feeling good” isn’t purely and only driven by money, but often by status and recognition. Being recognized for a job well done compensates for slightly less salary. This recognition doesn’t have to be in the form of a raise. It can be a couple of extra days vacation, public recognition in a company event, permission to work from home or similar. In too many cases, managers don’t even say “thank you” or “well done” to employees for completing certain tasks, implicating that “they are just doing the job they are being paid for anyways.”There are many ways to provide people with sufficient motivation. Many of them – such as salary, promotions, titles – are extrinsic motivators. However, intrinsic motivators are much more powerful, and companies fail to acknowledge this.

Driven by intrinsic motivation, people want to do things because they want to do them, not because they are being paid for them. This requires people to be given the right tools for the job, sufficient freedom on how to get the job done, responsibility on making choices impacting the quality of the job – in short, allowing your employees to be self-guided, responsible peple capable of doing the job they are hired to do, and making them feel good about it. If people are proud of what they are doing and have been given sufficient training and the right tools, they will do the job well and with responsibility without continuously asking for more money.

HR improvement  without raising salariesAnd this is where companies, managers and HR organisations sometimes fall short. We forget that driving factors for doing a job well are not necessarily money and financial rewards, but status, recognition and pride. W. Edwards Deming said: “All anyone asks for is a chance to work with pride”. If you give your employees a chance to be proud of what they do (and ensure they get recognised accordingly), you might be able to convert extrinsic motivation (salary) into intrinsic motivation. Your employees and your CFO will thank you.

Think about this before your next appraisal meetings, and you will find many ways to motivate your employees while keeping salaries at reasonable levels.