Employee motivation is one of the most important factors for business growth. Motivated employees create a positive working environment which fosters superior customer service, higher sales or improved productivity, adding value to a company’s bottom line.
Studies have shown that disengaged employees can cost organizations up to $550bn every year. Whereas motivated employees can more than double annual revenue.
But what is the best way to achieve this sought-after motivation? Many believe that employee compensation in the form of a salary is the best way to maintain a motivated workforce. Whilst others believe this has less effect or can even de-motivate staff. Instead, they place more value in other known motivators such as benefits, promotional opportunities, a company culture of empathy, recognition and job satisfaction.
Salary as motivation
In a study by the industrial psychologist, Edwin Locke, Ph.D., four methods for motivating employees were pitted against one another. Locke’s aim was to discover which would improve employee performance the most. He found that the average improvement to performance was greatest when money was motivating, at 30 percent. This far outperformed the other motivators he compared it to, including increased employee decision making and changes to the job role.
Whilst studies conducted in America have championed the use of salary as a motivator, on a global scale the picture can be quite different. The American workforce is classed as individualistic, motivated by their own personal goals, of which salary is one. This explains why Americans are more likely to apply for extra working hours, the overtime pay is motivation.
Studies have shown that salary may be a motivating factor but only in the short term. In research by Timothy Judge, salary affected worker’s productivity less than 2 percent of the time. So, if salary isn’t a fail-safe motivating force, what are the other motivating factors that can impact employee performance.
Recognition and bonuses
According to the 2019 Compensation Best Practices, 73 percent of organizations use a variable pay plan and incentive bonuses on top of base pay to reward hard work. Rather than expecting salary alone to motivate a workforce, linking salary to job performance shows recognition of effort, improves transparency within the business and thus improves employee motivation.
By identifying and recognizing the triumphs of top performers and tying their achievements into the bigger picture of the company’s success, employees are proven to be more motivated to improve their job performance in the future.
In a study, Timothy Judge and Barry Staw noticed that motivation at work could be directly related to job satisfaction.
Indeed, this is one motivating factor that is consistent across all countries and cultures. “In a study of seven countries, employees in Belgium, Britain, Israel, and the United States ranked “interesting work” number one among 11 work goals.” This is backed up by a second study where German employees, Dutch employees, and American employees rated “the fun of work” as the most important factor when choosing employment.
Company culture: empathy
According to a white paper by the Center For Creative Leadership, empathy within company culture is essential to employee motivation. This is a theory which tech outfit Businessolver backed up in a study conducted in 2018. They found that 95 percent of employees claimed they are more likely to stay with a company that is empathetic, and 81 percent would work longer hours for such a company.
Suggesting that a company culture of empathy is even more important than salary when it comes to employee motivation, 60 percent of workers surveyed said that they would take a pay cut to work for an empathetic company.
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