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Best motivation for employees
What's the best way to motivate employees?
- Higher base salary
- KPI-based bonus
- Stock options
- Flexibility & work from home
- Company mission & values
Of course, most companies rely on a mix of these. But if you had to choose only one option?
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I can see I'm in the minority on this, but here's my reasoning. If your crew doesn't believe in you (and your product), then none of the first three options matter. Why? Because they'll have doubt in the success of the product. That makes the first three options irrelevant. I definitely see flexibility being important, but again if your crew doesn't believe in you, (or your product), then they'll constantly be thinking about another employer in case you go through rough times (which face it - you will), and that's when it's all about the people who believe in the mission and value. Nothing else will matter, and you'll start hemorrhaging staff and you'll start the spiral downward from there.
@ac_walraven it also works the other way round. If the team believes in the company's bright future, but doesn't feel this would benefit to them as persons, I doubt they'd keep being motivated for a long time.
@daniel_engels Definitely. When it comes mission & values so there's so many levels to it. Belief in the product, the team, the vision, and of course... the leadership.
@daniel_engels @ac_walraven It is more about getting a sense of belonging and purpose, bits of it come from mission but bigger chunks of it come from being able to recognize that their work matters and is making a difference.
@daniel_engels @ankur_mehrotra1 Yup. Agreed. I'd add that is why it's so important to actually get quick wins. I've seen teams excited about a project and it's value/mission, but start to disperse because they aren't seeing the fruits of their labor coming to life. Meaning, slow rollouts, and stagnation on decision making from the C-levels.
as someone early in their career working in entry level roles, mentorship and training will weigh in more. i can imagine financial incentive takes a bigger weight for more experienced roles
Pay for performance if the job function is sales, starting salary below market, upper bound of salary 2x market top
KPI based bonuses for technical SMEs
stock options for value alignment across all roles
Growth opportunities- make people better than they were when they joined
Proper pay or flexibility- startups (like mine) dont have the capital to do both at the moment
Awesome discussion idea Daniel
@dylan_merideth as I understand, you suggest a pay very dependent on the KPIs. This could be highly motivating. On the other hand you might attract only risk-loving employees. Very often this would be rather junior professionals.
@daniel_engels I agree, while it attracts those with higher risk tolerances it also attracts high performers in the sales realm.
All of the above, as you rightly said. Plus, I'm adding another, a bit novel, option to the discussion:
A share of future cashflows, like a royalty, limited based on the employee's contributions in the past and the present.
This is enabled by VenEx, a SaaS product we just launched to this community today!
I'm not sure if this is "the best benefit", but it could be one of the best ways to build motivation and ownership in a way employees can visualize real wealth-creation from the company's growth, esp. if the returns from stock options are too far out and unpredictable.
Let us know what you think of it!
The real key, I think, is to customize these things so that you're appealing broadly to employees. First and foremost, invest in them and show them that you as a founder value and trust them. Create a company that values its employees and they will rise to meet the challenges. Of course, incentivizing is important (and tying their interest to those of the company through equity stakes and options is ideal). But, money doesn't matter if they don't feel committed to the company and that only comes through building the relationships and investing in them as individuals.
I think values and making a good and fun working environment. People will leave if they are not happy at work even though they are getting paid well.
After COVID, I believe the best motivation for employees is Flexibility & work from home facility.
I don't think of 'flexibility & wfh' as motivation - more a cultural benefit.
For me, the team is the motivating factor. Knowning everyone is pushing as hard as they can to build something amazing is what makes me want to be better.
I think it is better to explicitely distinguish motivated vs just relyable employees.
In general people get motivated and encouraged by opporunity of future perks.
So if something is not guaranteed by general rules then it can motivate someone to achieve it via doing their job great.
KPI-based bonus and value of stock options is not guaranteed so it could motivate employees to work harder whereas salary and work from home is already given to them and is not considered as something that depends on your effort.
@alexander_gridnev In a big company, you don't necessarily need all of the employees to be exceptionally motivated to make profits. In a startup, it might be a vital necessity to survive.
Hi Daniel, great question!
I believe that most people get the answer wrong.
When I was working in the tech industry, the HR department was always trying to make us believe that the ultimate motivation for employees is an amazing company culture.
BUT...
When the rubber hits the road, nobody cares about company culture.
Employees, and people in general, are usually looking for a great answer for the following question: "What's in it for me?"
And most of the times?
It's financial compensation. Money in their pockets. Food on their tables.
Yeah, company mission & values, and work flexibility are nice, but everything has a price.
Try to answer this question:
Would an employee agree to take a 90% cut in his salary, in order to improve his working conditions? Most likely - not.
But:
Would an employee agree to reduce his working conditions for a 90% salary raise? Most likely - yes.
Obviously, the salary you earn also plays a role.
If a person makes $1,000,000 per year, maybe they would not be ready to sacrifice working conditions for a 90% salary raise, because they are very well established and money is not supposed to be an issue.
But if a person makes $50,000 - $100,000 per year, a 90% increase is a life-changing amount in most cases.
Now, we're not robots, and we do have our needs, and even $1,000,000 per year is something you get used to and then (sometimes) want more. And this is where the culture and work flexibility comes into play.
So from my personal experience? Money always comes first, second, and third. Money is the only REAL means of showing REAL appreciation to your employees.
Then comes the culture and flexibility and everything else.
@vofeld this is a very important discussion indeed - and it's hard to make people say what they think. I agree that HR are often hypocritical when talking about company culture and values.
At the same time, I don't think 90% cut or increase shows a lot. In most cases, there is a market salary for a position, and companies make offers within 20% range.
I can easily see an individual agree for a 20% lower salary if it is accompanied by a more suitable company culture and mission.
@daniel_engels Yeah, that makes sense. That said, it all depends on their current salary, and how life-changing would the 20% lower salary would be.
Mission and values for sure, this steams into things like giving them leadership or ownership over projects, give them opportunity to see value and then back that
@daniel_engels Kind of, people feel more valued when the things they work on have value to them. Ways to inspire that can be found in giving responsibility and ownership over projects.
For me, when your employees come to the office daily, there must b gratitude for them like you can place a piece of chocolate over their table. It'll motivate them because I'd be happy with this.
@daniel_engels Yes, it's not for the long run, but you can change your strategies: give them bonuses every six months and increase their salary yearly.
Lately, there has been a lot of buzz surrounding WFH, and that's a good thing.
However, I think that the real motivation comes from good interpersonal relations in the company, and having everyone work on something they're passionate about.
I feel like the second point is especially important, because when looking at things long-term no amount of money, bonuses, or benefits is going to help someone if they don't like what they're doing.
If you can, take them out to lunch or treat them every now and then. Maybe even make them some food, cookies or something, and bring it in. It's a small gesture, but it shows that you care. Another thing would be to stay positive and don't always talk them about work. Keep up with their lives and ask them how their family is and such. Just generally be a nice person.
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@prepaidgift_balance well, of course lunches and small cocktail parties are helpful - as part of friendly atmosphere at workplace. But I don't think it's a major factor in the long run. It's even possible to build a full-remote team with a strong motivation.
It is super difficult to choose between KPI-based bonus and Flexibility & Work from home.
I chose KPI-based bonus option for one reason, other options on the list like Higher base salary, Flexibility & Work from home can give a boost in motivation when an employee receives it for the first time. Once the employee gets it that will soon become the new normal and the baseline for their employment so the motivation from these two factors can diminish over time.
KPI-based bonus will be a good way to keep the employee motivated as there is consistency and the KPIs will be readjusted regularly.
@rahul_mohanachandran people tend to appreciate less what they take for granted. It's important to keep the team members aligned. Defining accurate and objective KPIs isn't easy, though.
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