News

Can non-financial incentives work? You're in trouble if they don't

Tue, 03 Jul 2007 11:55:55 +1000

The Oxford English Dictionary defines an incentive as �Something that arouses feeling or incites to action�. If the only thing that will do this for your employees is money then you have problems. Of course people want financial returns for their work � they have to live and, yes, financial incentives work in many situations, but let�s look at some of the other reasons people may come to work.

It is worth considering volunteer organizations when we want to look at peoples� motivations. They don�t get paid yet many volunteers devote much time and hard work to their favourite causes. Often they risk their lives in fire and rescue type organizations.

Some of the jobs they do are often boring, and have low skill requirements yet they turn up week after week to work on the stalls, repair equipment, clean the premises or answer the phones. These people have found a cause they are interested in, can be passionate about and feel is worthwhile.

Why can�t we manage the same level of engagement at the business workplace?

Well, quite often we can � there are many good employers who, while they may not pay the highest wages or provide financial incentives, do manage to generate loyalty and passion in their employees.

Back in 1966 Frederick Herzberg conducted some research which has turned out to be very useful for managers. He was interested in the importance of work and working conditions to working people. His study covered 300 accountants and engineers and collected extensive information on what experiences made them feel good about their jobs and what made them feel bad. Fourteen factors were uncovered which influenced job satisfaction. What was surprising about the analysis was that the factors which led to satisfaction were different from those which led to dissatisfaction. This led him to believe that the opposite of job satisfaction was not dissatisfaction but rather just no satisfaction.

While inadequate financial rewards definitely caused dissatisfaction, increasing it did not necessarily lead to satisfaction.

The factors that provided the satisfaction were identified as: a sense of achievement; recognition; being given responsibility; advancement and promotion; awareness of prospects for further growth; interesting work.

If we are going to look at incentives, financial or non financial, the best starting point is defining an objective � what are we trying to achieve?

If what we are trying to achieve is retention of staff and productivity, or having them focus on a particular area of the business, and we feel for whatever reason that financial incentives are not the answer, then we should review a few factors.

Has the organization defined where it is going and what it stands for? If people can relate to what the business is aiming to achieve they stand much more chance of being able to relate their individual work to it and consequently finding it more interesting. Managers can help them make this link.

Do people really understand what we want them to do in terms of what is to be done and how they do it. Are there clear job descriptions which focus on what is they need to achieve. Are the organization�s core values described in terms of how successful people behave? If these are in place then there is more chance of someone knowing what they are aiming for and reaching that sense of achievement.

Is there a process in place to provide feedback to people on their performance � a process that systematically measures what people do and how they do it so that when they receive recognition they know it was for something worthwhile. The frequent pats on the back and �well done� are very powerful tools and the additional, more formal recognition, will add a significant boost to them.

Are there plans in place to help people develop and grow? Starting with a Succession Plan for the organization this should lead to evaluating the aspirations, performance and potential of individuals and putting a plan together that meets these along with the needs of the business. These plans can map out training, job expansion, promotions � whatever the business needs and align with the abilities and interests of the employee.

Having processes in place for all these factors will cover the key issues identified by Herzberg and provide the satisfaction that should lead to improved performance.

If you wanted to add further recognition, which are commonly referred to as non financial incentives such as awards, flexible hours, movie tickets and dinners, then these will certainly help, but on their own, they are not often a sustainable way of providing motivation.

So, in addition to the money, people generally want these other factors in their job and their workplace. If you don�t provide them they may well find them somewhere else. This can have major consequences for your business and may well be part of a gradual absenteeism or staff turnover problem that you already have.

If you would like some assistance in reviewing what you have in place please contact us.

You may wish to rate your business using our diagnostic tool which you can access from our home page.

Human resources planning - it's more than filling vacancies for the next few months

Tue, 05 Jun 2007 10:21:02 +1000

With the end of another financial year coming in Australia, planning for the next is upper most on many people�s minds. Is human resource planning or workforce planning up there with the budget? Possibly not. Quite often, with workforce planning, it will be treated as another budget line item and not taken much further. The reality is, if it is to be done properly, there are long lead times and it should be a regular feature of any manager�s role.

Workforce planning for many people is just about looking at new jobs coming up and how they might fill the vacancies. For those less fortunate, it may be about how they lose surplus staff. However, to do it effectively requires a little more forward vision coupled with a rigorous approach to ensure you have captured all the information possible � and that will never be enough!

A few of the steps you may wish to include are listed below.

Strategic Plans
Revisit your plans for the business and look at each objective and strategy from a workforce perspective. Do you have the people to carry out the plans? Do you have enough of them? Do they have the experience, are their conditions appropriate? Do they have the right competencies? (a combination of knowledge, skills, aptitude and motivation) Are they going to stay with you to see the plans through? When do you need to start recruiting? Is there enough in the budget? � new people may cost more.

Succession Plans
Have you reviewed your succession plans � not just for immediate replacements but looking ahead at future needs and recruiting accordingly? Maybe when you recruit your next Accounts Clerk you should be looking for your future Financial Controller. Immediate replacements are a must as anyone may leave your business for a number reasons and some of them may cause a sudden departure. What happens if several people leave at the same time? Building some depth in your talent pool is good insurance. Often it is better to have a surplus of talent and lose people due to lack of opportunity rather than have people suffer because of overwork, stress and uncertainty caused by too few resources. Do you have development plans to bring people up to the level your business needs?

Employment Conditions
Are employment contracts and general conditions appropriate for any new people being sought? Do you need full time or part time people? Will you be able to attract full time people? Flexible work arrangements often work well for all parties � make sure you have policies and procedures that allow you to do this.

Rewards
Can you attract new people with new skills? Has the market moved since you last took on new people? Will they integrate into existing salary structures? Do you need a blend of fixed and variable pay? Do you offer the right benefits? Young people are not particularly enthusiastic about superannuation but older people may be obsessed by it.

Recruitment
Do you have a recruitment process that includes a range of techniques for identifying the new skills and competencies required? Do you know where to look for people now that we�re in a full employment market? Are all line managers skilled in recruiting? Do they �recruit� constantly, even when you may not have current vacancies?

Training and Development
If you are recruiting new people there will probably be a need to carry out some sort of training � even if it is just induction training to give your new investment the best possible start. Have you looked at the possibility of developing your existing people for the new jobs? Often we find unexpected talent in our own ranks � people who are waiting to be given an opportunity. On going growth of staff is necessary and part of this is planned training and development. They expect it and will seek it elsewhere if you don�t provide it.

Defining the Jobs
Are jobs defined in terms of the results they are going to produce and how they are going to be measured? This process will help you design your organization and avoid the mistake of continuing with positions just because you�ve always had them.
Defining what has to be done is part of it. Defining how is equally important. This is why you need to revisit the core competencies of the business and check that they are what you need for the future. Whilst the current values and culture is a good starting point for this, Generation Y may not want to work for a business that has been built solely around baby boomers.

Performance Management
Once jobs are designed and people recruited, will you be able to manage them? Do your managers have the required skills? Do you have a performance management process? Are you prepared to listen to employees and make changes as a result of their feedback? Are you linking this information back into your workforce planning?

There are many aspects to planning for your people however if you start with these key factors and work on the action points that will come out of them, you will be well on the way to building your future workforce to deliver your business plan and proving valuable insurance against those unexpected events that always sneak up on us. In today�s tight labour market it is especially critical that as business leaders we can present our workforce plans as confidently as we present our strategic and operations plans. They are integral to our long term business success.

If you would like some assistance in any of these areas please contact us.