How to motivate executives

If you read nothing else, read this …

• Like other staff, if executives believe they are not valued by the organisation, they will leave, so it is important for employers to get the level of reward right.

• Employers need to ensure their executives are motivated to go above and beyond the call of duty to weather the uncertain economic climate.

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• Giving executives a choice of benefits is likely to be an effective way of motivating them.

Case study: Aviva reward policy pays out

Aviva runs a recognition and motivation scheme called Spotlight that includes senior executives alongside managers and more junior staff.

Under the scheme, employees can nominate one another for recognition and reward for contributing to the success of the firm. Nominations are made through an online portal.

The person making the nomination also suggests a level at which the reward should be made. This is accompanied by company-wide recognition.

The scheme appeals to executives, who can receive one-to-one recognition from their line manager, which is a vital relationship in ensuring the motivation of these employees. The line manager can also set the level of reward to ensure it is commensurate with the value the executive puts on their own performance.

Reward values are then banked and can be used for up to 800 reward items. A total of 20,647 financial awards were made in 2010.

Helen Jackson, rewards director at Aviva, says: “Spotlight is about saying thank-you to everyone who displays the behaviours that live up to the Aviva brand. It is a very impressive scheme that is easy to use and implement.”

Employers need to know what motivates their executives and to tailor reward accordingly, says Sarah Coles

When it comes to motivating executives in an organisation, independent consultant Paul Birch is clear. In his co-authored book Disorganisation: The handbook of creative organisational change, he says: “If your business is very predictable and process-driven, then maybe you can get by with executives who just show up and do their job. But the vast majority of businesses spend most of their time in an environment of complexity, where managers and executives are required to be fleet of foot and innovate on a minute-by-minute basis. That takes a great deal more than just showing up.”

Finding the key to motivating executives means getting to grips with the fundamental drivers of motivation within each individual, says Birch. The challenge for compensation and benefits professionals is to align these theories to reward and benefits.

According to Target Training International (TTI), six values and drivers motivate executives: utilitarian/economic, theoretical, social/altruistic, individualistic/political, traditional/regulatory, and aesthetic.

There is one type of individual who can be motivated effectively through money alone. Such executives are known for having utilitarian values, where the primary driver is the amount of money they make. Simon Garrett, a director in Hay Group’s UK executive compensation practice, says: “You tend to find a lot of these people in sectors such as investment banking. Employers may also see executives motivated by money because they see it as a badge of success.”

Paul Waters, a partner at Hymans Robertson, adds: “If an employer is looking for a short-term effect, such as controlling costs, raising revenues or selling something specific, bonuses can be effective.”

More creativity

But the other five drivers of motivation require more creativity to align them with reward. Take, for example, the individual, motivated by theoretical values and a drive for learning and knowledge. Birch says: “Clearly, paying them more is not going to motivate them, but developing them will.” For such people, stretching projects and formal development opportunities such as access to a master of business administration course may be effective.

Many of the other types of motivation also have less obvious links to benefits. One type of executive is motivated by altruism and a driver to be helpful to others. Another value is aesthetic, where executives may be driven by a desire for form and harmony, and the fifth driver relates to traditional values, which manifests itself in a desire for order. There might not seem an obvious connection between these motivational drivers and reward, but employers might find factors such as the working environment and workplace culture can play an important role.

However, employers may find the key motivational driver is power, where political or individualistic values are paramount. This initially looks difficult to align to reward, given that only business success will bring advancement and the power they desire. But for executives, this is also expressed as a desire to be in control of their own lives.

Giving such people choice over the way they are rewarded is particularly powerful.

Menu of benefits

Birch says: “I would suggest offering executives a menu of benefits, so they can choose reward that motivates them. If they are knowledge-driven, they can spend the pot on studying for an MBA; if they are altruistic, they can spend it on the organisation doing more charitable work. I don’t suggest just giving people a pot to spend on whatever they like because people will just take the money.”

While it is essential to understand what motivates each individual, this is just part of the process. Simply motivating executives is not enough; there is also the question of what employers are motivating them to do, and what is rewarded.

In a command-and-control environment, hitting targets may be a useful measure of success. In more complex environments, where leaders are required to empower others to take decisions and allow for creative leadership, the measures may need to be softer. Birch says: “Employers need to ascertain the leadership characteristics that the business needs and reward those in a way that fits with the individual’s motivation. A one-size-fits-all approach can never work.”

Once employers know what they are motivating executives to do, there is the question of how to deliver the benefits. Senior staff do not normally want to deal with a centralised pay and benefits function. They work for individuals and are motivated by a one-to-one relationship with their manager. Here, reward is most effectively delivered through that individual channel, says Hymans Robertson’s Waters.

Another variable is getting the level of reward right. The basis of equity theory says executives must feel the reward is commensurate with the value they put on themselves. Birch says: “If they feel the organisation is not valuing them significantly, they tend to move.” It does not need to be financial reward, but compensation and benefits alongside promotion and recognition.

Waters adds: “The biggest mistake people make is assuming they know what motivates someone. It is so different from person to person that an assumption can lead to a lot of wasted effort.” At executive level, the answer lies in sufficient tailoring and flexibility of reward and benefits, as well as involving the line manager to ensure the package is personal and enhances and reinforces the one-to-one relationships that are keeping the executive motivated.

Six key drivers for executives

• Business theory says that senior executives are driven by six key values and motivators: Utilitarian/economic: the primary motivation driver is money.

• Theoretical: top motivators are theoretical values and a drive for learning and knowledge.

• Social/altruistic: motivated by altruism and a drive to be helpful to others. Individualistic/political: driven by power, and therefore has a desire for business success.

• Traditional/regulatory: primarily driven by a desire for order. Aesthetic: driven by form and harmony.

Read also How is executive reward decided?