Ever since the industrialization of the workplace in the early 1900’s experts have been attempting to get more out of their workers. At the heart of that effort is the research around motivation and the creation of motivational theory. The creation of retirement plans, employee perks, and much of management and leadership training has all centered around how to attract, retain, and capitalize on the efforts of employees. And this is exactly where things start to splinter, the things that attract an employee are not the same things that retain employees, nor are they the same as what often generates the greatest deal of effort from employees. According to a 2009 study done by Towers Perrin (now Towers Watson) indicated that not only are the drivers of attraction, retention, and engagement different, but there are even differences between specific age groups. As if designing the workplace was not hard enough; instead of having a nice list of five things you can do as an employer, their study revealed that not only do you have five top things in three categories (attract, retain, engage) but you also had four generational age groups as well (Millenials, Gen X, Baby Boomers, and the GI Generation.) Since I assume most of you are not in accounting; that leaves a possible 60 different factors that weigh into your employment policies and practices when it comes to attracting, retaining, and engaging employees.
Now the title is “Loyalty, Motivation, and Engagement” so maybe it is best to start with a few definitions on how I plan to talk about these terms. Loyalty, by its traditional definition, “is faithfulness or a devotion to a person, country, group, or cause.” Motivation, in its purest form, is most easily defined as “that which gives purpose and direction to behavior.” Engagement is a rather new term when applied to the workplace and thus a little harder to find an established universal definition. It is generally regarded as “the quality of giving concerted effort and thoughtfulness in one’s work.” Even from the onset you can see how each of these might be slightly different. Certainly they can all be related but assuming they are the same could lead to certain shortfalls in an organization’s human capital strategy.
In 1983, the median tenure of a 55 year old worker was 13.6 years with the same employer. In 2010 it was 10 years. Younger workers tend to stay for a shorter period of time than their older counter-parts. The average 35 year old in 1983 stayed for 5.8 years and averaged only 4.4 years in 2010 (which is actually up from 4.1 since 2008 – in large part due to the recent job market.) Either way, employers over the last 25 years have seen a decline in employee tenure by approximately 25% ; and while indications show that trend slowing in recent years, it is not stopping.
Even though it is declining, the data shows there is still value in tenure based incentives as employees get older. In fact, there is a significant increase in employer loyalty after the age of 44, nearly doubling from that of a 35 year old. And while there may be several factors that influence that increase, one of them may be that people’s values tend to change as they get older and their life circumstances change. According to the research study by TowersWatson the top retention driver for employees 18-34 is “Excellent career advancement opportunities”, for employees 35 and up it is “[the] organizations reputation as a good place to work”; signifying a shift from opportunity to stability as a value.
A challenge that loyalty based incentives face is the principle of reciprocity. The long term contract expired long ago for the employee but the employers are still harboring resentment when employees leave after a few years. Employees tend to expect similar behavior from their employer as is expected of them. The last few decades have seen the organizational decline of fixed retirement plans and the increased occurrence of pension plans going bankrupt. With this decline in the long-term payout comes a degree of cynicism from Generation X and younger workers and as a result, they are not looking to an organization to provide long-term financial benefit. This tends to cause a more short-term view of how the employee-employer relationship is defined.
And it’s not just that employees don’t expect to stay with one company for life, they get a strong message that it may actually be holding them back in their career growth and earnings potential. The message often comes from well-intentioned fiscal policies regarding internal promotions. Often companies set a limit on the size of salary increase that can be given to an internal candidate versus and external hire. This sometimes creates a scenario where an employee gets promoted for less than an external would have been hired for. The intent is to not set false expectations of internal raises but the outcome may be the message that an employee’s longevity with the company may be worth less than the experience of an external. Employers may be unintentionally sending the message that switching companies will raise your earnings potential faster than staying with your current employer, thus actually hurting employee loyalty.
Also at issue is the philosophical argument some experts make that a person can only be loyal to another person and not organizations. Which is supported by the Gallup Organization’s research that indicates the number one reason a person stays with an employer is their direct supervisor, it is also the number one reason they leave. So while loyalty based incentives have their place, they most certainly do not capture the desires of all your employees.
A recent article from Harvard Business School warned employers from viewing loyalty as an either/or proposition. Either you are loyal or you’re not. Citing research that indicated most employees were loyal to their company while they were there. Another caution is thinking loyalty means “forever.” A metaphor may be like dating; employees can be committed to the employer they are with but that does not mean they will not eventually move on to something new. (Harvard article)
As one employer told me, “I’d rather have a star performer for 3 years than a dud for life.” So perhaps loyalty, while admirable is not all inclusive of what employers really want in their employees. We want them to stick around but we want them to do something while there are here.
This points us to the research around motivation. Even at its heart, a “motive” is simply a reason, or something that causes a person to act. And while there has been a lot of research recently pointing to a new understanding of human motivation perhaps it is best to view the evolution of motivational theory to see where we have gotten stuck.
Early on in human societies as interactions became less about pure survival and more about cooperation, we see the first hints at motivational theory. Though we still had base needs of survival we developed a second drive, something that moved us towards things that were pleasurable and away from things that were punishing. Though other animals may share this from an immediate sense, humans have been able to channel it to a broader sense that transcends longer spans of time. This evolution of motivational theory has held the industrial world captive for a long time. This is the traditional “carrot and stick” view of motivation. I am motivated to get the carrot and avoid the stick.
This idea of human motivation has persisted so long that we may take it for granted as truth and even as our experience proves to us time and time again that human motivation is more complex we still work from a “carrot and stick” mentality. Motivational theory continued to evolve through the 20th century and people such as Abraham Maslow, Frederick Herzberg, and Douglas McGregor started expanding the “carrot and stick” theory. They all asserted that human motivation was more complex than simply and affinity towards positive stimuli and avoidance of negative stimuli.
Abraham Maslow developed a theory with the belief that people are more calculating about what they seek, namely that people seek an unmet need. And they do so according to a “hierarchy”. His “hierarchy of needs” model has physiological needs as our most basic needs (food, water, shelter, clothing, etc.) Or put in organizational terms (salary to buy food, adequate working conditions, and equipment necessary to do the work). The next layer is what he terms as Security, which could also be termed as safety. Organizational elements that provide security are things like a reasonable belief that my job will be there tomorrow, insurance in case I get hurt, safe working conditions, security as I near retirement, etc. You can see how ‘loyalty’ may overlap a little here. The third layer of Maslow’s hierarchy is “group identity”. This is the layer where we feel like we belong to a group of peers or at least not seen as an outsider. Organizationally this may show up in new employee orientation programs, company merchandise, business cards, and committee involvement. It also shows up in subtle group dynamics and is the basis of the Gallup Organizations question in their Q12 engagement assessment “Do you have a best friend at work?” The fourth layer of Maslow’s hierarchy is that of “self-esteem” or a feeling of self-worth. Essentially, it is our desire to feel good at what we do. Organizationally this may show up as rewards programs, recognition, career development training, promotions, performance reviews, positive feedback, or selection as a subject matter expert or trainer. The fifth and final level of Maslow’s hierarchy of needs is the idea of “self-actualization.” Or the ultimate realization of a person’s potential. Maslow essential says we are constantly driven towards finding what else we are capable of once we feel we have become proficient in what we do. Self-actualization is behind the question “what’s next for me?” Organizations help with self-actualization by judicious use of delegation, stretch assignments, life-planning, career and personal development, and promotions or job shifts.
Frederick Herzberg developed a similar evolution of the “carrot and stick” idea of motivation but separated it a little differently. The Two-factor theory supposes that people may not be motivated by a good work environment but they will certainly be demotivated by a poor one. Also known as the Motivation-Hygiene theory, the message was that the prevention of dissatisfaction is just as important as the encouragement of motivating positives. Not a far cry from the carrot and stick but Herzberg basically said that the absence of certain things is as much of demotivator as the presence of a “stick.”
Among what Herzberg identified as Hygiene factors are things such as salary, benefits, status, company policy and administration, job security, supervision, working conditions, and personal life; much of what falls in the bottom three hierarchies of Maslow’s principles. What Herzberg identified as motivating factors are achievement, recognition, the work itself, responsibility, growth, and promotions; many of the things that exist at the higher levels of Maslow.
Douglas McGregor used some of Herzberg, Maslow, and the father of scientific management, Frederick Winslow Taylor to create two theories or perhaps two philosophies of how employees are managed. One of the theories, deemed Theory X, manages with the belief that people are inherently lazy and will avoid work if possible. This theory often leads to very restrictive management and a strong belief that policy, punitive measures, and micromanagement are the only ways to get people to perform. The general belief behind theory X is people are only motivated by extrinsic forces to do work, absent extrinsic rewards people will do nothing.
The other theory, known as Theory Y, adheres to the general belief that people by their nature may be ambitious and self-motivated. When it comes to poor performance managers who adhere to theory Y beliefs are more likely to find fault in the supply of resources, training, or organizational structure than in the employee simply being lazy or wanting more money.
And while there is value in all of these, by our experience they are all incomplete. In fact many of flaws have even been pointed out by the developing theorists. Maslow even stated that it is impossible to attain self-actualization because once you move on to the next thing; you start back at the bottom. For instance when you get promoted or switch jobs, the first thing most people think about is, what is the salary, then how stable is the company and what are the benefits. When we first get there, the cultural fit is the first thing we try to figure out so we can feel like we belong…and so the hierarchy continues and cycles.
Much of the difficulty, and Herberg and Douglas touch on this somewhat, is the nature of intrinsic versus extrinsic rewards. Much of motivational theory has been focused on extrinsic motivators but as organizational leaders and employees ourselves, we know that getting a raise does not make us work harder or even feel more loyal to our company. And the sheer multitude of “carrots” can be mind boggling. The paradoxical message is always treat your employees as individuals when it comes to motivating them but makes sure people feel equal. The confusing message is often “treat them differently but make sure you treat them the same;” and when you start using extrinsic motivators, that task become difficult to say the least. A $5 gift card to your favorite coffee place might mean absolutely nothing to someone who doesn’t drink coffee; so while it is the same (objective), it may not be “fair” (subjective.)
Other motivational research has also shown a few other dangerous flaws in the use of extrinsic motivators besides the idea of equality among employees. In a study done by Edward Deci in 1969, he took two groups of people to solve puzzles. On the first day neither group was rewarded with anything extrinsic. The time it took each group to solve the puzzle was relatively the same. On the second day, Deci told the first group (Group A), they would be paid if they could complete the puzzle. This time, although the unpaid group’s time improved from the day before, Group A finished faster than Group B. Which seemed to confirm the traditional belief that if you reward me, I work harder. On the third day, however, Deci told Group A that he only had enough money to pay them for the one day so they would not get paid this time. This time, Group B dramatically outpaced Group A and Group A seemed completely disinterested in even doing the puzzle at all. What Deci was able to confirm was unless “if-then” extrinsic rewards are continuous, they can actually cause demotivation. Another study done later also demonstrated that over time you need to increase the degree of the reward for it to have a similar motivating effect. So a $10 gift card will only be good for so long, then you will have to give them a $15 and then $20 and so forth. Not only do “if-then” rewards need to be continuous, they also need to be progressive. Extrinsic rewards can become a slippery slope especially when they are expected. This is why when company perks go away performance and moral dips more sharply than it might raise when those perks are added.
More recent research has also showed that when it comes to tasks that require highly complex, abstract, and creative thought, increase rewards can actually decrease people’s performance as they get so focused on the reward. So using extrinsic motivators in an “if you do this, then you get this” capacity may actually be hurting motivation more than it is helping
This is not to say that extrinsic motivators don’t work, they are just unpredictable. Enter the realm of intrinsic motivator research.
Herzberg, Maslow, and Douglas all hinted at it but they had difficulty coming up with a concise explanation behind what they termed as “the work itself” or “self-esteem”, or “self-motivated”. Self-motivation is the larger idea of intrinsic motivation and realistically, since we choose to act, it is at the heart of “what gives purpose and direction to our behavior.”
But what inherently are we looking for in the work itself that generates this self-motivation? Some recent research and work environment paradigm shifts may start pointing to the answer. According to Dan Pink in his book, “Drive: the Surprising Truth about What Motivates Us” there may be three fundamental elements that encourage self-motivation. The first of which is the principle of Autonomy. This relies heavily on a Theory Y mentality that given the choice people will tend to engage themselves in activity. Autonomy in the workplace gives employees more choice around how they get work done and sometimes even what project they work on. Several companies have harnesses the power of Autonomy with some impressive results. Google implemented something called “20% time” a number of years ago. Employees are encouraged to spend 20% of their time so roughly a full day of work per week on whatever they want with whomever they want. Google credits 20% time with the advent of Gmail, Google News, Google Reader, Google AdWords & AdSense, Google Talk, Orkut and Google Earth. And it continues to reap rewards as many innovative Android smartphone applications have been developed during 20% time. Atlassian software in Australia has something similar called “FedEx days” where employees for 24 hours can work on any software idea they want but they must deliver an idea or product in 24 hours which is the reason for the moniker – whatever you do it has to be delivered the Next Day. NetFlix, Best Buy, GAP, and many others have all embraced a ROWE or Results Only Work Environment where attendance in in the office is totally up to the employee, as is the time of day and number of hours they work. The only thing that matters is employees produce results. At all of these employers there is no such thing as vacation time; employees are given total control over their schedules as long as results are being attained. Every one of these employers has seen an increase in productivity, decrease in voluntary turnover, and a reduction in overhead costs. Employee satisfaction as you might imagine, is also up.
The other principle that might encourage self-motivation is the idea of Mastery; that we are driven to get better at things. This might be close to Maslow’s principles of self-esteem and self-actualization but in a slightly more simple term. Rather than seeing what is next, we are simply driven to become better versions of ourselves. People tend to not wake up with the attitude of how they can screw things up. And most of us want to feel good or at least adequate at something. Anecdotally, many people take golfing lessons, piano lessons, foreign language lessons, and other things to get better at something they have no intention of making money at or receiving any extrinsic reward for. So intrinsically there is something driving us to simply get better, even if just for our own sense of satisfaction. Career development, education, and training even perhaps in areas that have no direct relevance to a person’s current jobs can speak to an individual’s desire for Mastery.
The third principle that might point to what encourages intrinsic motivation is the idea of Purpose. People want to feel a part of something larger than themselves. While this could be akin to Maslow’s Group Identity principle it also points to something bigger than just a sense of belonging. Purpose is not only belonging to a group you feel similar to, it is doing something you feel has meaning or significance. This can be evidenced by the large number of people engaging in volunteer activities and side projects that are sometimes very different than their career. Companies have been ramping up their efforts and support of charities, movements, ecological responsibility, social contribution, and cause-related marketing. And many of these movements are started internally by employees who want to see their companies broaden their outreach.
This principle of Purpose is also a good segue into engagement because if Mastery and Autonomy causes us to act, it is the purpose that gives us direction. After all many of the life shifts we spoke of earlier when dealing with Loyalty occur when people step back and take a long hard look at their sense of purpose and whether they are truly getting what they want. Organizationally speaking this can be easy to dismiss as something that is out of their hands and I would say to some degree yes, and to some degree no. While it would be difficult to align a company with every employees’ sense of purpose the flipside of this is at least telling employees the purpose of what they are doing. Understanding the why can have a powerful impact on people who are tasked with a certain project. If I understand the desired outcome I can make better decisions that help get there.
And that is the key to harnessing purpose, outcomes. While organizations often measure outputs, people look at outcomes. If the company increases revenue by 15% that is a pretty decent output, but as Joe or Jane Q Worker that has no meaning to me. Employees want to know the outcome of what they are doing, not just the output. Output might indicate how well people are doing but ultimately we want to know why. The output of taking foreign language lessons is that I can correctly translate from one language to another. The outcome is I can have a conversation with someone in Barcelona, Spain about the best place in town to sit on a patio and drink wine while the sun goes down. That is outcome, the end result of my hard work. Essentially this is a way to take metrics and explain it in a way that has meaning. Simply put, outcomes give me a reason to work towards, outputs help me measure if I am getting there.
So how do you get people to believe or work towards your company’s purpose? Giving metrics meaning is a good step but employee engagement as it is currently measured indicates a few other things that might matter to employees. Engagement as a research field has only recently surfaced and many experts are still trying to weigh in on the best ways to achieve greater “incremental effort” from their employees. One thing is strikingly clear and that is engagement in the workforce is not very high as an average. BlessingWhite, TowersWatson, and the Gallup Organization are three of the leading firms doing organizational research on employee engagement. Although some of the nuances of their studies are different, the net average indicates that only about 1 in 4 of employees is engaged. That is to say only 1 in 4 is giving incremental effort; about 65% are ether doing okay work or simply going through the motions; and about 1 in 10 are actively disengaged. I like to refer to the actively disengaged as the people who have quit but they just have not left yet. Gallup estimates that disengaged workers cost companies over $350 billion per year in lost productivity.
The good news is that engagement seems to come closest to blending loyalty and motivation. According to the studies nearly 85% of engaged employees had no plans to leave the organization. This is pretty good. It may be unrealistic to shoot for 100% retention as though the engaged employees are passionate about what they do, they may outgrow their position and choose to “self-actualize” to borrow Maslow’s terminology. So they goal may not be to get a higher percentage of your engaged employees to stay, it may be more about increasing the number of engaged employees. And for that, the studies produce some varied but related findings.
In the Blessing White Study three of the largest contributors to employee engagement were: more opportunities to do what I am good at (Mastery), career development or training (Mastery), and greater clarity about what the organization needs me to do and why (Purpose). Many engaged employees also cite “meaningful work” as a key driver to engagement. You can begin to see how the elements of motivation start to play into engagement as well. These findings also confirm a more theory Y version of employees in that they want to contribute more, they just may not feel they are given the opportunity.
The TowersWatson study also debunks some myths and provides encouraging evidence that people innately want to achieve at high levels as well as have a stable place to work. Among the top five things employees found important in their jobs were: having good work/life balance (autonomy), having a secure position for the long term (loyalty), maximize earnings, doing exciting, challenging work (mastery), and having adequate benefits/security for my family (Security). Further indications point even more evidence employees want to do a good job. A large majority of the employees are looking for challenging work assignments that broaden skills (mastery), opportunities to learn new knowledge or skills (mastery), and set high personal standards for themselves (mastery again).
With all this research and financial importance of engagement, motivated workforces, and reduced turnover, why has it been so elusive? Some of the cause, as indicated by TowersWatson, might be a large majority of organizations and senior leaders have difficulty connecting the role they play in increasing employee engagement (and thus incremental effort). Two major myths may be contributors to this disillusionment: a Theory X view of employees as lazy and dispassionate, and that the only person who impacts the employee is their direct manager. In truth, research shows employees’ desire is to work and produce good results, and while the relationship between an employee and their manager is a vital part, senior leadership plays a huge role as well.
When asked about senior leadership, employees have a less than flattering view: more than 50% of employees felt senior leadership viewed employees as either just another part of the organization to me managed or as unimportant. Engagement scores were higher in companies where employees felt senior leadership sincerely cared about the employees as people. So it not just a management issue; employee engagement, loyalty, and motivation needs organization wide solutions and leadership solutions as well.
I started out by saying loyalty, motivation, and engagement are not the same and that is still very much the case. Most often times one solution will not fit all three concepts. The overall objective is to demonstrate that while they are different, they are interrelated and overlap. And similarly, the factors in an organization that influence each of these are also different but interrelated. The solutions necessary to increase loyalty, motivation, and engagement lie in the organizational culture, policies, and management practices. We cannot force employees to give incremental effort but by creating, encouraging, and modeling the right environment, research indicates that people will give incremental effort willingly. We just need to provide the space, resources, and support for them to do that.