Money isn’t enough to motivate employees
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With the Millennials—those born between the early 1980s and 2000—becoming more choosy about their career path by often preferring to do what they believe in, companies need to go beyond providing better pay to motivate the workforce, according Ayelet Fishbach, professor at University of Chicago Booth School of Business.
“The demand for stimulation or interest for doing something that they (youth) believe in is on the rise,” said Fishbach, who teaches behavioural science and marketing, in an interview on 22 April.
“This is also a cause for concern, as employers are finding it tough to satisfy the growing expectations of young employees.”
On her maiden trip to Mumbai last month to deliver a lecture on Match Your Motivational Tactic to the Situation as part of the global leadership series, Fishbach said employee expectations are growing at a pace faster than what employers can provide. “Hence, employers should be aware that to do a good job, you need to provide more than the salary,” she said.
A recipient of several international awards, including the Society of Experimental Social Psychology’s best dissertation award and the Fullbright Educational Foundation award, Fishbach’s research works are based on social psychology with emphasis on motivation and decision-making. Her study papers have been presented all over the world, including at Carnegie Mellon University, Tel Aviv University, Stanford University, Yale University, and the Wharton School of the University of Pennsylvania.
According to her, depending on the varied needs for different employees in an organization, companies should follow different motivational tactics to boost their performances. While there are some whose needs are basic such as salaries and other monetary benefits, there are others who value respect and appreciation from the bosses and colleagues. There are also a few others who seek personal stimulation and like to be challenged in terms of their job.
“Some people are unsatisfied with their salary; some are not satisfied because they are not being appreciated. Some people are unsatisfied because they are doing the exact same thing for a long time. What’s challenging for you might be different from what is challenging for someone else,” she said.
Fishbach has divided into four categories or “layers of the cake” on how to motivate people. Setting goals and giving feedback on the progress of achieving those goals; giving incentives and awards; providing a social setting or culture within the organization and finally nurturing intrinsic motivation where people are encouraged to take up work that they enjoy doing it.
However, she points out that more goals should be set up in the short term, like a weekly or monthly rather than long term one as most people only end up working much harder towards the end. Besides, employers should be able to strike a balance while giving positive and negative feedback, otherwise it might even backfire.
“Ideally positive feedback should make employees more committed towards doing the job, and negative feedback should make them feel that they have not done enough and should increase their effort. Now the problem is that positive feedback can communicate that the employees have done enough and can now relax, and negative feedback can communicate that it is not for you and that you are not good enough,” she said.
A general rule that Fishbach advises to most employers is “for new people in the organisation more positive feedback, for experts or who have stayed long enough in the company, they can afford with a little more negative feedback”. In addition, adding a random incentive or an “uncertain bonus” also makes people excited about the job and workplace, she added.
While more intensive studies are yet to be done on emerging markets such as India, Fishbach also points out the management style of most employers in developing nations are “still old fashioned where it’s still more about salary and punishment”.
“The old management is all about salaries and the old style is that employees only have one need which is salary. If they are unhappy we should increase their salary... if they are unhappy we should let them go. These do not work well with more sophisticated employees like in professions where they want them to be creative,” she said.
In a competitive market where firms are trying to move ahead aggressively while trying to remain cost effective, can companies and managers afford to provide those incentives?
“The good news is that the bar for being managers is very low because most managers are not very good. So one doesn’t need to do all of these things. You just need focus on doing some of them. If you get a few of the things right you are already much better than the average manager,” said Fishbach.