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Employers face a conundrum in 2023: escalating labor costs have combined with historically high inflation to eat into already thin profit margins, yet employee engagement is down in the U.S. for the first time in a decade.

“The ratio of engaged to actively disengaged workers in the U.S. is 1.8-to-1, down from 2.1-to-1 in 2021 and 2.6-to-1 in 2020,” reported Gallup. “This is the lowest ratio of engaged to actively disengaged employees in the U.S. since 2013, almost a decade earlier. The record high is a ratio of 2.7-to-1 recorded in 2019.”

The bottom line is that cash is tight, especially for small and medium-sized businesses, so they must find a way to motivate workers besides boosting their paychecks.

“Paying your employees more in a tight labor market with rising prices is worth considering, but that’s not the only thing that employers should do to attract and retain the best talent,” writes leadership guru John Rau in Forbes.

The Next Step Beyond Salary Increases and Job Promotions

Paul Falcone writing for the Society of Human Resource Management (SHRM) in June 2023 says that companies that have already maxed out salary increases, as well as job promotions, are left with this perplexing question: “How do companies keep great workers engaged when budget and promotional limits could otherwise stifle career growth?”

The good news is that there are plenty of non-monetary ways to motivate employees, and businesses that focus on these tactics can gain a competitive advantage.

“An attractive salary entices job seekers, but it won’t guarantee employee retention, motivation, and engagement,” writes Bassam Kaado in Business News Daily. “Tangible and intangible incentives include flexible work policies, trusted relationships, professional growth, and more.”

Borrowing a page from Frederick Herzberg – who wrote the seminal “Work and the Nature of Man” and published the influential Harvard Business Review article “One More Time: How Do You Motivate Employees” —  employers must shift their focus beyond “extrinsic factors” such as compensation to the “intrinsic factors” of what it means to work within the organization.

“I agree with Herzberg on his assessment that only intrinsic factors are capable of moving a team beyond minimized dissatisfaction into the realm of creativity, engagement, productivity, and other truly transformative outcomes,” writes Rau.

Rau says that Herzberg’s lesson was that “once you’ve dealt with the dissatisfaction associated with extrinsic details, positive satisfaction only comes from”:

  • Having a sense of accomplishment inherent in the job.
  • Having the opportunity to achieve and advance.
  • Being supported and challenged for excellence.
  • Being empowered to participate and broaden your role.
  • Understanding and respecting the utility that your employer’s products or services provide, warranting profit and growth.

Or as the HBR article summed up: “Forget praise. Forget punishment. Forget cash. You need to make their jobs more interesting.”

Employers Should Care About Motivation, Engagement

Employers that think “having a job” should be enough motivation for any worker and that engagement doesn’t matter as long as employees are clocking in and clocking out on time may be missing out on increased productivity and improved customer satisfaction.

“Engaged and motivated employees help businesses reach their goals,” explains Indeed. “Employees who enjoy coming to work and want to reach their goals usually provide a number of benefits to their organization.”

Indeed says the benefits of the motivated and engaged worker include:

  • Less time off: Employees who enjoy their work and feel motivated to reach goals are less likely to take time off work.
  • Higher retention rates: A positive and supportive work environment with appropriate motivators usually leads to higher employee retention rates.
  • Positive workplace relationships: In most cases, employees who feel motivated to do well have more positive relationships with their peers and managers.
  • Increased productivity: Motivators and incentives keep employees producing high-quality work throughout their careers.
  • Improved customer interactions: Happy, motivated employees often have better customer interactions than those who aren’t effectively incentivized at work.

Is Your Boss … the Key to Your Happiness?

Much more than just money, the key to employee satisfaction might hinge on their relationship with their supervisor and other management.

“When it comes to employee happiness, bosses and supervisors play a bigger role than one might guess,” says McKinsey & Company. “Relationships with management are the top factor in employees’ job satisfaction, which in turn is the second most important determinant of employees’ overall well-being. According to our analysis, only mental health is more important for overall life satisfaction.”

It’s worth reviewing McKinsey’s research numbers:

  • When asked about the drivers of life satisfaction, respondents cited job satisfaction (25 percent) as No. 2, only behind mental health (36 percent).
  • When asked about the drivers of job satisfaction, respondents cited interpersonal relationships (39 percent) as No. 1.
  • When asked about the drivers of satisfaction in interpersonal relationships at work, respondents cited their relationship with management (86 percent) as the overall top factor.

And despite this critical link between life and job satisfaction and worker/supervisor relationship, 3 in 4 surveyed said that the most stressful aspect of their job was … their immediate boss!

McKinsey’s article concludes, “Because of the connection between happiness at work and overall life satisfaction, improving employee happiness could make a material difference to the world’s 2.1 billion workers.1 It could also boost profitability and enhance organizational health.”

Falcone in the SHRM article agreed, saying that two things are clear:

  • People join companies but leave managers.
  • The relationship with the boss and the learning curve are the two most critical aspects of employee retention.

Falcone did, however, caution that motivation cannot be self-imposed by management on employees – they must find self-motivation – but that companies should create the right environment for motivation by implementing relevant non-monetary HR policies.

The Pandemic Changed Engagement in the Workplace

Motivating employees in ways other than money has taken on even more importance in a post-pandemic world.

“Three years after the start of the pandemic, we’re seeing how our collective trauma has impacted the psychology of work,” says a May article in HBR. “Feeling passionate about our working life — liking what we do and how we do it — is as important as ever, but what creates that passion has broadened and deepened. Leaders need to catch up or they’ll be operating frustratingly empty hybrid offices with quiet-quitters and short-timers.”

Remember, 2019 was the high water mark for employee engagement and Gallup says that the engagement elements that declined the most from pre-pandemic levels were:

  • Clarity of expectation.
  • Connection to the mission or purpose of the company.
  • Opportunities to learn and grow.
  • Opportunities to do what employees do best.
  • Feeling cared about at work 

And these engagement issues may only intensify as younger workers are more disengaged than their older counterparts.

“Engagement for those under age 35 (young millennials and Gen Zers) decreased by four points and active disengagement in this same group increased by four points compared with before the pandemic,” reported Gallup.

5 Non-Monetary Ways to Motivate Your Employees

Here are 5 non-monetary ways to motivate your employees in 2023:

  • Delegate Key Tasks: Delegation might conjure up images of mundane tasks pawned off on an unlucky employee, but delegation done right can provide on-the-job training that can motivate and challenge workers while advancing them along their career path.

This isn’t about managers delegating minor tasks that they want off their desk; it’s about delegating what they’re good at and putting people in a position to gain hands-on experience doing what they’re most interested in,” Brenda Villa, director of human resources at Desser Aerospace, told SHRM.

Falcone explains that delegation should include “stretch assignments” where employees “are able to get their hands dirty learning about and gaining exposure to other parts of the organization that they find exciting from a career development standpoint.”

  • Create Leadership Development Opportunities: Indeed says that whenever possible, give talented and effective employees opportunities to lead their peers.

    Leadership opportunities can range from rotating leadership at weekly staff meetings to allowing a team member to present an idea to a client or upper management to asking workers to oversee key projects.

“One thing that staffers often look for in an ideal employer is leadership development opportunities,” Rob Hall, senior vice president of global human resources at Avita Medical, told SHRM. “In fact, we know that career and professional development lies at the top of Gen Y and Gen Z wish lists. Place employees into rotational leadership roles that help them grow and develop professionally.

  • Expand External Training: Employees want to continue learning and progressing in their careers so offering them external training opportunities can motivate them. Encourage employees – by allowing time off or even paying the cost of – to seek professional certifications and other skills training via in-person and web-based, self-study courses.

    Indeed, employees who feel stagnant in their role can face professional burnout and look for new opportunities elsewhere. Encourage your employees to develop new skills and continue to challenge themselves through professional development and training opportunities.”

    Falcone says that two to three such seminars per employee per year will not break your company’s HR budget but could keep employees engaged in their jobs.

  • Build Strong Relationships: As we said earlier, the role of the boss or the direct supervisor is crucial so strong relationships must be built. SHRM says to schedule a 30-minute professional development meeting each quarter with each employee to go over the employees:

o   Self-assessment of their work.

o   Identification of where they need greater support, structure, and direction.

o   Progress towards their career goals and where they need help in achieving them.

“Effective leadership is based on personal relationships, and you won’t really know how your individual staff members are doing unless you ask and make it safe for them to provide sincere answers,” Villa told SHRM.

Gallup says that this relationship building is so important that instead of quarterly meetings, managers should hold one meaningful conversation per week with each employee – 15 to 30 minutes long – about goals, customers, well-being, and whatever else is on the employee’s mind.

  • Increase Employee Recognition: Never underestimate the power of recognizing employees for their achievements and contributions to your company.

    A Workhuman-Gallup Study found that employee recognition is a powerful tool leaders have to drive engagement and performance. In a large-scale analysis across hundreds of organizations and thousands of teams, the study found if a business of 10,000 doubled the number of employees who receive recognition or praise for their work in the last week, they can realize a:

o    9 percent increase in productivity.

o   22 percent decrease in safety incidents.

o   22 percent decrease in absenteeism.

Gallup estimated that these percentages could translate annually into:

o   $92 million in gained productivity.

o   $2.8 million saved due to decreased workplace safety incidents.

o   $3.2 million saved due to fewer unscheduled absences.

The study concluded that employees that feel frequently recognized drive improvements to several interrelated and compounding business outcomes.

“Although [science] validates the practical value of recognition, very few business leaders are taking employee recognition seriously enough to see the benefits. Only two in 10 leaders say that it is a major strategic priority at their organization,”
said Gallup Global Practice Leader, Ed O’Boyle.


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