Motivating Employees, CompDoctor July 1999

Q. We have talked about motivating and incenting our employees with pay raises, bonuses and deferred compensation, as well as trips, prizes, etc., but we need some new ideas. How do other companies keep employees motivated?-K.S.

CompDoctor: Dear K.S., you have hit upon the central question that keeps compensation consultants, including The CompDoctor, in business. So I am answering you at the risk of my livelihood. In fact, I may be knocking at your door sometime soon, looking for a job with enough great incentives to keep this armchair-loving, late night TV-watching, Doritos muncher motivated.

First off, I'll be happy to tell you what other companies do, but you may wish that you hadn't asked. The truth is that all too often, companies resort to what my favorite late night talk show host might call Stupid Human Tricks in a vain attempt to show how much they love their employees. For example:

• Customer newsletter says, "Our employees are our most valuable resource." Employee newsletter eliminated due to budget cuts.
• Employees receive keycard access to front door. Fee for misplacing keycard while working Saturday while executives golf: $25.
• When employee finishes probationary period, receives whopping 10-cent raise per hour.
• After first year of employment, employees can join 401(k) program that has no matching contribution by the company.
• Company logo merchandise offered for sale to employees, effectively subsidizing company's advertising campaign during their leisure time.
• After calling in sick, employee must produce note from physician to get paid for the day, keeping medical care costs at a maximum. Employees slapped with greater share of health insurance premiums.
• "Great work environment" cited as reason why employees should be willing to work for less than market compensation.
• Employee performance reviews delayed three months while boss gets hefty pay increase as scheduled.
• Boss provides wrong information to payroll department. When employee calls attention to error, payroll continually makes new errors, raising employee's blood pressure, thereby increasing health care costs.
• Boss tries to motivate employees by telling each one "in confidence" that others got bigger raises last year for working harder.

Now, let's have a drum roll for tonight's Top 10 List of New and Exciting Ways to Motivate Employees. Except that none of these are new and exciting, and that's my point. They're really just the basics and that's why they work. Here goes:

10. Every chance you get, thank your employees for coming to work, for being dedicated and for offering their enthusiasm, hard work and ideas. Kissing their feet as they arrive for work each day might be a little too much, but, if it works, who am I to judge?
9. Forget the fees for lost keys. If your employee want to get in after hours and on weekends, I cannot imagine a cheaper way to respect their dedication than to overlook such human frailties as an occasionally misplaced piece of plastic.
8. Unless you are going to give raises once a month, a 10-cent increase will only be an insult to employees. However, it may cover the cost of the spray paint they'll use on your house in the middle of the night. To be meaningful, an annual raise should amount to at least 4 percent of base pay.
7. When it comes to 401(k) plans, let employees join in 30 days. Then match at least 50 cents on the dollar up to 6 percent of their contribution. If you really are serious, match up to 200 percent of employee contributions, and base the match on company performance. For example, start at a 75 percent match for minimal company performance. Move the match up to 100 percent for expected performance, and all the way to 150 percent or more for performance that you only thought possible in your dreams.
6. Go ahead and print up a catalog full of logo-imprinted jogging shorts, t-shirts and coffee mugs, but offer the first one or two items free. After that, employees might just have enough company spirit to buy more.
5. Why make your employees out to be hypochondriacs and liars? Eliminate sick days, vacation days, etc., and move to a paid time off policy. Then if they want to take time off, they can do so with a clear conscience, even if they are not sick. Statistics show that employees take fewer days off when they are treated like adults. Novel idea, don't you think?
4. Great work environments work only for existing employees. It is hard to recruit with such a policy unless you are clearly known for your unique environment. Also, what's great for you may be ho-hum to others, so think before you replace cold hard currency with smiley-face lapel pins as rewards.
3. Always, always, always get review forms done as scheduled, and take time to go over them with your employees. After all, the most important part of your job is to help your employees to excel. How can you do that if you don't spend time with them?
2. Pay employees on time, and do the math correctly every time. There is nothing more irritating than an employer who can't get the simplest calculations right.
1. Employees may peek at each others' pay checks, but such intelligence should never come from supervisors. Each individual wants to feel valued for what they can do, not for how well they can outdo each other.

In a nutshell, that is how you motivate employees. Simply appreciate their efforts, pay them what they are worth, make sure pay is competitive with the market, and don't hen-peck them on the minor issues.

So, K.S., while I may have worked myself out of a job by revealing my most basic prescription, I hope that I've contributed in some way to the health of your company. Now, once you have mastered the Top 10 List, you will be ready to try the fancy stuff, like rewarding your employees with a nice Canned Ham. (My apologies to David Letterman, who cannot know how much he has contributed to this column.)

CompDoctor Question of the Month:

What is an acceptable range of pay for a CEO of small manufacturing company in the Midwest, with less than $100 million in revenue?

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