Future Strategy 2006 – Motivation schemes must gauge what matters

In a world without any real employee loyalty, motivation schemes must go beyond the ‘wow’ factor if they are to encourage staff retention, says Alison Coleman

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Incentives, rewards and motivational techniques play a key part in boosting staff motivation and productivity levels, but with the dynamics of employment relations set to change dramatically in the next few years, motivation schemes are likely to take on a very different appearance.

Traditionally, employers have always relied on things like voucher schemes, corporate family day events and ad-hoc reward schemes, like raffles and prize draws to motivate their staff, generally with high levels of success.

Employers looking to raise the value of those incentives may already be planning themed events around some of the forthcoming sporting occasions, such as the World Cup in Germany next year, or the London Olympics in 2012. However, Professor Cary Cooper, an occupational psychologist at Lancaster University Management School, believes that employees in the future will be less content with high profile fun and games and more interested in getting a share of the action.

"Offering special incentives, like a trip to a major sporting event does deliver a certain ‘wow’ factor. It is great when offered occasionally, but not as a core motivator.

"I believe that we are going to see share ownership being used more as a motivational tool, where you aren’t just giving people a bonus, you are giving them something that makes them feel closer and more engaged with the company," says Cooper.

But using share options as an incentive has its limitations. These may encourage teamwork within the company, but there is the potential for employees who are not pulling their weight to benefit from other people’s work.

Profit sharing, therefore, doesn’t always engender motivation in all employees, although it is usually highly effective in organisations with few employees. This is because they know that their performance will make a difference and will be evidenced by an increase in the business profits. Even so, employers must be certain that share ownership is what the employees want.

"The owners of one successful company that I worked with had around a hundred members of staff, and were very keen for their employees to have share options. However, they were surprised when hardly any of them took it up. It transpired that what most of the staff really wanted was more in the way of healthcare benefits.

"The lesson for employers is to invest time in finding out what motivates people, and bear in mind that those factors are subject to change," says Cooper.

Ultimately, organisations will have to invest more in establishing these at the point of recruitment, so rewards can be built around them.

Dr Roland Tarleton, motivational research specialist at talent management consultancy Getfeedback, is the author of the motivational style questionnaire (MSQ), a recruitment tool that assesses people’s intrinsic motivational factors. Not just in terms of what individuals can do, but what they will do.

"As people become more detached from the concept of close employment relations, companies will have to work that much harder to attract and retain the talent that they want to keep for the long term.

"To do that they need to be able to motivate them long term, and they can only do that by establishing what those motivational factors are before they are hired. Trying to motivate people at a later stage with short-term incentives will not work," he explains.

In a world of low headline unemployment and increasing skills shortages, employee motivation and retention is becoming a critical, bottom-line issue for many organisations.

As employees have accepted the potential for job insecurity in a global economy and taken control of their own careers, their loyalty to a single employer is often being diminished.

The danger is that this phenomenon will reduce the ability of employers to retain and motivate their key employees, which is essential in the developing knowledge economy.

The Future Foundation’s group analysis manager William Nelson explains: "Organisations are starting to realise that the drawback of downsizing and delayering is that employees know they can no longer rely on a job-for-life and are starting to take control of their own destiny.

"Without any automatic loyalty to the organisation, employee retention (rather than having the flexibility to hire and fire) becomes key, especially in knowledge-centred companies or departments."

He cites a recent piece of research carried out by the Future Foundation, in which one human resources director commented: "We want people to join us for life. We don’t guarantee it, of course, but employee retention is critical to us. The trouble is that employees don’t buy it. They need persuading."

This all means that the more lighthearted and frivolous incentives, such as a day at the races or a hot air ballooning experience, may become supplementary to more substantial and financially more attractive incentives.

"Employees in future are much more likely to be motivated by something like eldercare vouchers than gift vouchers. But it is up to the employer to find out exactly what works," adds Cooper.