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.
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”:
Or as the HBR article summed up: “Forget praise. Forget punishment. Forget cash. You need to make their jobs more interesting.”
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:
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:
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:
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.
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:
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.
Here are 5 non-monetary ways to motivate your employees in 2023:
“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.”
“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.
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.
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.