If Money Doesn't Motivate, Then What Does? Tapping into discretionary effort

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Hey there, and welcome to episode 36 of the No Bullshit Leadership podcast. This week's episode: If Money Doesn't Motivate, Then What Does? Tapping into discretionary effort. We spoke in Episode 30 about remuneration in the context of pay rises and bonuses, and the role that money plays in motivating people to perform. Although bonuses can provide an effective incentive to perform, there are many other ways to elicit people's discretionary effort. So what do you do when you can't throw money at people to get the results you need?

This episode deals with the things that will motivate your people to perform and deliver value, no matter what's happening to their pay packet. So I'm going to start with two very important concepts. The first one is, the money is the money. And the second concept is that some people have high personal standards, and others, well, not so much. We're going to talk about the role that purpose plays in motivating people, and I'll finish off with seven ways to motivate your people to perform other than money, no matter what. You can download that as a free PDF from www.yourceomentor.com/episode36. So let's get into it.

Now when we talk about motivating people to perform, I want to step back a little bit further than when they've already turned up and they're working on your team. Because all of this starts with building a great team. And this starts with the ability to hire great individuals. So it's useful to go back to the attraction and hiring of people at your organisation as this can have a baring on what happens later in terms of motivating them. Our ability to hire great people will always be governed by a couple of macro factors, which are largely beyond our control as hiring managers.

So there's the type of organisation. Is it a commercial business, is it a regulated monopoly? Is it a listed company, is it a government sector organisation, is it a not for profit, and so forth. The industry that we operate in is important. So for example you get a very different candidate attracted to banking as you will to child care. The brand perception of your organisation plays a big part, and of course, how well your organisation pays. Now let's not gloss over this. How you pay effects who you can attract, and the employment market decides, like any other market. So if you have any interest in hearing more about this, go back to Episode 12 of the No Bullsh!t Leadership Podcast, The War For Talent, and have a listen to that.

Now an important principle to realise about salary packaging is that once somebody accepts a role, the money generally becomes a hygiene factor. So in other words, the money is the money. It's part of the deal I signed up to. And people sign up to what should be a set of shared understandings between themselves, and the organisation. So there's generally an employment contract, or a letter of offer of sorts that is signed, and there's also a psychological contract. Basically, the understanding that each of you has formed during the process of you acquiring the role. But have you've ever gone into an organisation, and had buyer's remorse, when you're joining your organisation only to find that the reality falls well short of the promises made? We'll have a bit more on this later, but money and what you're expected to do for it is part of this suite of understandings between you and your employer. It quickly becomes a hygiene factor as long as the psychological contract isn't broken. Although, to be clear, people will work for bonuses and other non fixed remuneration.

Now we did mention in Episode 30 that although short term incentives are pretty common as a form of financial incentive, there are a few common problems with how they are set. So the first problem is that very often the KPIs aren't set in a challenging enough fashion, so they're too easy to achieve. And then the short term incentive becomes more like an additional payment of fixed salary. Second problem is, very often, these KPIs measure activity, and not value delivery, and that's a big trap to fall into. And the third problem is, sometime they don't drive the right behaviours because they're not balanced enough. And so STIs (short term incentives) can be really good, for setting incentives, but they do have their issues if you don't govern them properly.

So just standing back from this for a minute, what we see is that every organisation has a likely set of candidates in their pool, based on all those types of factors. So what you need to do is make sure that you get the absolute cream of the crop that you can, with the pool that you've got. We just need to remember that the second principle is, some people have high personal standards, and others don't.

So just before we get into how to motivate your people, let's make sure you understand one really key principle. You are looking to get the highest percentage of premium performers in your team that you possibly can. Now it's far easier to solve the problem in your raw materials, so to speak, than trying to motivate people who aren't premium performer. Generally, these premium performers will comprise no more than 10% of your team, and more often it's much closer to 5%. But what if you could lift this to 20% or more? I've only ever managed this is quite small teams, where a high percentage of my direct reports have been premium performers.

Now let's just pause for a minute to think. If you're sitting there at the moment thinking that the majority of your team are premium performers, then you're probably wrong. I'd encourage you to have a really good think about this, and I'm going to give you some filters to look through in just a minute to do that sort of reflection. But once you get into the lower layers of the organisation, it's really super hard to replicate that percentage of premium performers, even if you can build a high percentage in your direct reports. And the reason for this, i, because every single leader, throughout the layers of the organisation, needs to have the same drive and commitment to do the work of finding the best people, that you do. And that's sometimes quite rare.

So how would you recognise a premium performer? Well basically, they're driven through intrinsic motivation that stands out in a sea of people who look the same. You could drop these people in the middle of the Sahara Desert without the basics, such as food, water, or a map, and you could come back a year later, and you'd find that they'll have built a village, a community, and the infrastructure required for long term survival. Come back in five years, and hey, maybe they've built you a pyramid. But there's a checklist for leaders who will grow. And I've covered this off before, but I think it's important enough to go through once again in this context.

Leaders who will grow are easy to spot. They have a thirst for knowledge, and the motivation to apply it. They have the willingness to tackle tougher, and tougher challenges. They make regular and frequent efforts to innovate. They have an ability to anticipate and avoid obstacles. They have an openness to ideas and improvements submitted by others. They take calculated risks to accelerate progress. They learn from their mistakes, and they don't repeat them. They're quite happy to make their peers successful. They put the team results ahead of their own. They connect the dots, the value drivers, so they can get leverage for the organisation. They seek feedback from diverse sources. And they can articulate complex problems in simple terms.

So now that we know what a premium performer looks like, you need to look to these people first. Enable them, and get them to drive the results for you. They're the only ones who'll lead, regardless of title and position. And they're the ones who bring along the balance of the organisation, because unfortunately most people just aren't like that. So before we get onto motivating the workforce, I just want to make it really clear that there is no substitute for hiring better quality people. I'm just going to do that again. There is no substitute for hiring better quality people. In terms of return for effort, having the right people, returns 10 fold over motivating people who don't want to be motivated.

So, what makes a difference to the balance of your workforce?

Let's briefly talk about the role that purpose plays. Now in the simplest terms, you've got to try to get your people above the mentality of exchanging money for time, and this comes with purpose. Without the belief in a purpose, the majority of the workforce will never give you discretionary effort. "Well, what about paying them more to deliver more?" I hear you ask. Over time, look that's not discretionary effort. It's normally just over paying for standard performance that you should be able to get anyway if the team was working effectively and efficiently on the right things, and I hate paying for things that I should be able to get for free if I just had the gumption to do it. So I'm not talking about that.

Purpose is really important in people signing up to something more than just the exchange of labour. But purpose itself is necessary, but not sufficient. It's a critical ingredient, but without high standards, difficult goals, and leadership drive, the purpose is not enough to guarantee the performance. Purpose may motivate your people to be part of the organisation, but not necessarily motivate them to do the things that you need them to do, and this is a really important distinction.

Now we've got a bunch of listeners who work for not for profit organisations, and I just want to you this as an example. I have to preface by saying that I've never worked in an NFP, however, I've spoken over the years to many CEOs and other executives from these organisations, and I've even mentored a couple. So I've got a reasonably good idea of how they work, and at the risk of making rash generalisations, I think this serves as a good example for the point I'm trying to make.

Sometimes the nobility of the purpose can overtake the drive for results, and the more noble, the cause, the less inclined people are to focus on the real value drivers. Sometimes these organisations can develop a family culture, and this can be extraordinarily unhealthy. Organisations require strong leadership to convert the great intent into productive action that delivers value.

So let's get on to the seven ways to motivate your people without money. Number one, understand and promote your employee value proposition. Why would someone want to work for your organisation? What do you actually offer them? An employee value proposition is an inventory of benefits from the employee's prospective. So it helps to not make as many mistakes in the hiring process because you're filtering people on the way through. And it helps your people to see the bigger picture of the value the organisation gives to them beyond just the cash they make each week or each month. But you got to be careful, can you back up the promise in your employment value proposition with action? Remember the psychological contract we spoke about before.

Now at CS Energy we did a bunch of research of people who joined the organisation. And we found out what their perceptions were of our organisation before they made any moves to get a job, and then as they went through the employment process, and then after they joined the company, after their first few months in play. We wanted to find out how their perceptions changed, from the initial brand perception, through to the reality of working with us. And what we learned there, helped us to develop a very realistic proposition for our employees, that we knew we could support in actual fact.

Number two, make sure it's a two way street. You need to demonstrate that you care about your people's goals, as much as you want them to care about yours, the teams, and the organisations. So how do you make their work fit their lives better? There should be flexibility in working arrangements, and some give and take. And make the right calls in times of conflict, because that's when people notice the most. If anyone that works for you has sick parents or sick children at a point in time, you've got to let them know that that's the priority right now. You're trying to drive loyalty and trust. People need to know you actually give a shit about them. Without this, any additional effort will be fleeting, and even then, it'll be given begrudgingly. It doesn't matter how much you pay them, you'll get mercenary behaviour, with no buy-in, and even golden handcuffs have limited use. People actually need to know that you care about them.

Number three, communicate the benefits of extraordinary performance. I'm not talking about the benefits the individual, or the personal reward, I'm talking about the big picture and the vision. So how does what we do contribute to the economy, or to the environment, or to our customers? There's got to be something more than just the “I'm producing a widget” concept.

Number four, set high standards for performance and behaviour. You want people to feel the deep satisfaction that comes from achieving difficult challenges, and this is a really big driver of self esteem. Now I won't talk about this too much because I did record a whole episode on this about six months ago. It was episode number eight, and it was entitled, ‘Are Happy Workers, Productive Workers?"' It explores the difference between just trying to keep people happy, and by helping them to have impact and to achieve things that they didn't think they could otherwise achieve. That's what drives that long term deep personal satisfaction.

Number five, give people autonomy and ownership. Let them guide their own work destiny, of course within reason. You've got to give them clear boundaries, and parameters to work within. But sometimes this is as simple as the distinction between you telling them what to do, and not how to do it. If you're working at the right level, you should be doing this anyway.

Number six, create a winning team mentality. What does winning look like? And more importantly, what does it feel like? In the words of Jack Stack in his excellent book, The Great Game of Business, he said, "Make sure your people know where the scoreboard is. And make sure they know how to make the score move." Pretty simple, right? But belief and confidence are huge drivers of motivation and performance. You watch any sporting team when they get on a hot streak, everything seems to go their way. You need to get your people to believe in the inevitability of winning and enjoy the process. Even when they occasionally lose or fail. As any of my friends will tell you, I often say, "I'm a lucky guy." Good shit happens to me all the time for no apparent reason, just because I expect it to. And you want to have a team where people have that attitude, and that approach to everything they do.

Finally, number seven, reward the approximations of desired behaviour. People respond really well to praise, but only if it's genuine, specific, timely, and accurate. Hollow or insincere praise only creates distrust and cynicism. Now I've seen this many times with weak or permissive leaders. They think that blowing sunshine up someone's ass is an effective way of motivating, but it actually has the opposite effect. When I give direct praise to people, they know that it's in the context of the high standards I set for them, and it has a significant impact on them. So if you can manage to praise and encourage the right behaviours and performance when you see it, it will have a significant impact on how much your people are motivated to keep performing in that manner.

Alright. So that brings us to the end of Episode 36. To pick up the free download, Seven Ways To Motivate Your People, just head to www.yourceomentor.com/episode36. Thanks so much for joining us, and remember at Your CEO Mentor our purpose is to improve the quality of leaders globally. So if you're enjoying the podcast, please take the time to give it a rating on your favourite podcast app, and write a quick review. This'll help us to reach even more leaders. I'll look forward to next weeks episode ‘The CEO Wants Culture Change, or Does He?’

Until then I know you'll take every opportunity you can to be a No Bullsh!t leader.