Most companies, and most people, are clueless when it comes to motivating their employees to do their best.  They think the key to motivating their employees is a combination of threats and rewards, with the rewards mostly consisting of salary and benefits.

That is actually about as inefficient for motivating people as you could come up with and still have employees.  When you pay people by salary, you’re paying them for being present at work.  Benefits are the same, except that instead of the employee choosing what to spend the money on, the employer chooses.

You get what you pay for.  If you pay people to be present at work, they will be present at work.  They will, generally speaking, do enough work while there to avoid getting in trouble.  That’s how the normal pay structure works… they threaten you with reprimands or firing if you don’t produce your quota, and reward you for being there, doing the minimum amount of work via salary and benefits.

But what do you get if you do more work, or better work?  Generally speaking, you get nothing… at all.  Often times you don’t even get a verbal thank you from your boss, let alone something that stands out in your memory.

So we’ve covered why the normal structure doesn’t work… now let’s get to the meat of the article, what does work.

1. Pay By Accomplishment

   This is probably the strongest motivation of all the items on this list.  Unfortunately, it is also the one that is the hardest to implement… you can implement any of the others at any level of a company, from three man teams up to the entire corporation.  This particular change, however, has to come from the top, because it is a HUGE change from the norm, and requires a lot of additional work for initial setup.

   That being said, paying someone for what they accomplish makes how hard they work mean something.  At the vast majority of companies, if I don’t work in sales, I can have triple the output of the next highest worker in my same department/field/whatever, and I will make zero more than him.  In fact, I will make zero more than the LOWEST performing person.

   A lot of companies actually do pay by accomplishment, but only for their sales department.  After all, it’s very easy to see how the performance of a salesman affects the company monetarily… when they sell more, the company makes more.  That’s obvious enough that it’s not hard to talk people into paying a commission, or in other words, by accomplishment.

   Other departments, on the other hand, are generally not quite so obvious.  The change in most departments comes from them becoming more efficient, accomplishing more of whatever they do in less time, with less effort, and generally with less money (especially if they become efficient enough to need less staff).  That being said, other departments are more difficult because it’s harder to measure their output, also.

   Take a call center, for example.  If you pay people based on how many calls they handle, you will get them pushing people off the phone, not really providing good service.  If you pay them based on customer satisfaction on the other hand, you may get them spending TOO much time per call.  So the solution, in cases like this, is to use multiple criteria… in this case, they get paid based on the number of calls combined with customer satisfaction.  If people report a three out of five satisfaction, you get X amount.  If it’s a 4 out of 5, you get Y amount.

   As a special note, the criteria for departments that perform maintenance should have to do with uptime (ie the time where there are no problems) rather than problems fixed, or you get backwards incentives (incentive to cause, or at least not prevent, problems).

   One last note, but it’s very important.  All companies should have a standing policy that if an employee suggests something that improves profit, whether by increasing revenue or saving money, that employee should get a percentage of the increased profit.  That provides HUGE motivation for actually suggesting ideas that might really contribute to your company.

2. Reward Extra Effort By Means Other Than Money

   This is an important motivator, as well.  Money is nice (very nice to some), but what motivates many people even more, once their basic financial needs are met, is public recognition of their extra effort.  This can be a nice little plaque, a meeting called in which they are thanked, or even just having the boss take them out to lunch.  These things don’t have to be big and expensive, though people will remember that, too, they just shouldn’t be totally cheap for it’s type of item(don’t give them a $2.99 watch if you are going to give them a watch, give them a $40.00 (or more, if you’d like) watch).  Being cheap provides exactly the opposite effect of what you’re after, telling them that you don’t value their extra effort any higher than whatever cheap amount you spent.

3. Hold Contests

   Most people are, by nature, at least somewhat competitive in any area where they think they are good.  That means you have to design your contests to be in an area that helps performance, while still making everyone feel like they are able to participate.  Retail sales is a great example of this idea… you can set up a small prize, say $50, for the person who sells the most items, or the most value, in a limited time, like a week or two.  The second might even work better, because it allows people to be less high pressure salesmen, instead concentrating on getting a few people to buy big items.

   Even though the amount is relatively small, people will work harder, both because they want the prize and because they want to WIN.  That desire to win enables you to use much smaller prizes than you otherwise would need.

4. Distribute (Or Post) Top Workers Lists

   This is really a combination of #2 and #3, a contest where the reward is other than money (though you can certainly offer money to whoever is number one on the list for even more motivation).  Again, this draws on people’s competitive nature.  People love to hear that they are number one at almost anything.  People are proud to be the number one coffee bean grinder… it doesn’t really matter how trivial the thing is, it’s still motivational to hear someone recognize you as number one.  Top worker lists build on this… and can be organized by any criteria you choose.  You can have the top salesman by volume, by dollars, or by customer satisfaction.  Or you can have a list for each, though each list you add dilutes the value of all existing lists by a little bit.

If you have the ability to do these things, you will find your employees working harder for you, and more satisfied with their jobs, even if their actual monetary wages don’t change much.  The secret to motivating your subordinates is understanding that they want to be rewarded for their efforts, not for their time.

There are exceptions to that rule… there are people who prefer to be paid for their time, rather than their efforts.  There is a reason they prefer it that way, though… they don’t want to work hard, to put in effort beyond the minimum.  The great secondary benefit to changing your reward structure is these minimum effort people will (after much complaining) tend to find their way out of the company, while the ones who work hard will stay.  That makes your company (or department, or non-profit, or whatever) that much leaner and stronger.

Rewarding people based on their efforts will get you (or help you keep) better employees, help you weed out the ones who are not contributing their fair share, and make your good employees happier, all while almost certainly helping both your income and your profit.