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Alternatives To Raises That Employees Appreciate

June 4, 2011

From American Express OPEN Forum

 By Mike Periu – Principal, EcoFin Media

 Original Post June 3, 2011

Satisfied Employees

Image courtesy of photostock / FreeDigitalPhotos.net

Keeping employees motivated during challenging times is extremely difficult. When the economy is performing poorly it reflects on the overall level of sales and profitability of your business. This in turn makes it difficult to offer raises or other monetary compensation to employees. For top performers, this can be especially frustrating.

If the situation isn’t managed properly then it can lead to unmotivated staff that will become restless for new opportunities—at another company. All is not lost, however, if you are willing to be creative and offer employees other types of compensation that preserve your cash while offering the recognition that is so deserved. So where do you start?

Understand what motivates employees

The New York Times bestselling author Daniel H. Pink wrote Drive: The Surprising Truth About What Motivates Us last year which synthesizes important and in-depth research regarding how to enhance human performance. For creative work, the results are surprising: More compensation can actually hurt performance instead of improve it. Simply paying your company’s thinkers more money won’t achieve the intended result. Not being able to offer a raise because of your company’s finances is not a hindrance—it’s an opportunity to align your reward mechanisms with factors that are scientifically proven to enhance employee performance.

The three factors that enhance performance

There are three factors that enhance the performance of employees performing creative work: Autonomy, mastery and purpose.

Autonomy refers to self-direction and a certain degree of freedom in the workplace. It’s not an excuse for creating a free for all. Instead it acknowledges that employees are not robots that need to be micromanaged. For creative, productive employees, nothing is more harmful than being micromanaged. It sends the message that the company doesn’t trust their judgment, doesn’t feel they are sufficiently competent to handle responsibility and frustrates their efforts to apply their best thinking to the business problem at hand.

Mastery refers to continual improvement and eventual domination over a specific set of tasks or skills. It’s not too difficult to understand this right? The better you are at something the more you will enjoy doing it because there is joy and satisfaction in doing something well.

Purpose refers to the sense that what one is working on is part of something larger and more important than themselves. Most successful entrepreneurs understand this about themselves. They don’t just want to make a mountain of money—they want to change the world. As Steve Jobs put it “[they want to] put a dent in the universe.” This doesn’t just apply to entrepreneurs. Talented, creative employees also want to achieve this sense of purpose and if you provide it, the results will be outstanding.

Design company policies around these motivating factors

These factors may not be as tangible as a 5 percent raise, but they are less expensive to implement and actually achieve the intended goal. More importantly for business owners, weaving these factors into the culture and operations of your company can have long-lasting positive effects. Consider revising your company policies to reflect these factors of autonomy, mastery and purpose. Tangible examples include: instituting a flex-Friday schedule, instituting a remote worker program, providing training programs, instituting a mentoring program with top managers, sharing your grand vision regularly and frequently with your employees.

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