Entrepreneurs and executives are always looking for ways to keep their employees motivated. Typically, monetary rewards would get the job done; however, in recent years, business leaders have been finding that despite increasing extrinsic factors like money, employee productivity and employee engagement have not improved.
This experience has been validated by several studies which reveal that in today’s workforce, motivators have shifted. Bonuses, raises, and commissions—rewards that were once the go-to methods for motivating staff—have lost their effectivity. One such study found that excessive rewards can result in a decline in performance. Now, before you make drastic cuts in compensation, focus instead on what will keep your team—and yourself—happy, engaged, and productive.
According to author Daniel H. Pink, human motivation is largely intrinsic, and models of motivation driven by extrinsic factors such as money result in a fear of punishment that can decrease employee engagement and productivity. Instead, Pink explains that we are biologically wired to three factors that can help them be more productive: autonomy, mastery, and purpose.
Traditional management methods focus on standardized processes and employee compliance, which can stifle the human desire for autonomy. Though these methods have their merit, if they are the only methods used, employees may begin to feel powerless and insignificant. Empowering employees to build upon their own ideas for the business has been shown to increase not only employee engagement, but even improve those aforementioned processes.
For example, in one software development firm, employees are given one day a quarter to work on independent projects of their own volition. Some worried that this time might detract from their quarterly employee productivity—instead, these sessions have led to software fixes and ideas for entirely new products.
According to Pink, autonomy can motivate employees to think creatively without conforming to strict workplace rules. “By rethinking traditional ideas of control—regular office hours, dress codes, numerical targets, and so on—organizations can increase staff autonomy, build trust, and improve innovation and creativity,” Pink says.
We all have an innate desire to improve our skills and abilities, which Pink refers to as “mastery.” Examples of this are ubiquitous; from participating in organized sports to playing music, cooking, crafting—the list goes on and on. Although we aren’t always paid for these activities, we do them both for enjoyment and because we want to improve. We are driven by a sense of progress.
This philosophy also applies in the workplace, where we spend most of our time. Motivators that involve mastery have proven more effective than monetary rewards when the employee’s role is restricted, specialized, or if they feel they are not growing as individuals.
The third intrinsic motivator, purpose, involves our innate desire to do things in service of something larger than ourselves. People intrinsically want to do things that matter and this motivates improvement in employee productivity and engagement.
The best organizations in the world know that an underlying purpose for their business—one that transcends the boundaries of profit—increases employee engagement.
Meaningfulness can be an elusive factor in the workplace, but leaders can help create an environment that increases the potential for employees to find it. Identifying and communicating a shared mission, vision, and values can go a long way in fulfilling employees’ desire to do things in service of something larger than themselves.
It’s important to note that monetary rewards can still work, but only if the company’s culture maximizes intrinsic motivators. Incorporating autonomy, mastery, and purpose prove much more powerful than relying on extrinsic motivation alone.
The key is to compensate your staff well so that they aren’t worried about money and instead are focused on their work. Then, if they can work with a degree of autonomy while learning/improving and serving a greater purpose, employees engagement and productivity will improve.
Adam Frederico is a Manager at Accelerated Growth working with clients across multiple industries. He has an MBA with concentrations in accounting and entrepreneurship from the University of Chicago Booth School of Business. Adam hails from the Rocky Mountains but has found a new home for the past 8 years in downtown Chicago.