A Better (& Cheaper) Way to Motivate Employees
Most start-ups don’t have much in the way of cash to pay big salaries and bonuses. They might offer stock options to keep a carrot dangling in front of their key people as they spur them to work every waking hour.
After interviewing about 180 company founders for my forthcoming book, Hungry Start-up Strategy, I have concluded that there is nothing more powerful in motivating a start-up’s people than a mission that they believe in passionately.
But when it comes to getting people to do the right things every day, a compelling mission can only go so far.
Beyond that, I have found there are four things that will really help to turn that passion into effective action.
1. Annual reviews aren't enough.
Most companies hold meetings between managers and employees every year to review how well they did in achieving their previous year's goals. For the most part, this process is completely meaningless when it comes to motivating people--particularly those who work for start-ups.
How so? Your start-up may change its short-term goals almost daily as a way to adapt to rapidly changing customer needs, competitor moves, and discoveries about your own strengths and weaknesses.
So if you want your people to feel that they are doing the right thing, each of them needs to set specific goals and negotiate them with managers and the rest of the team. Those goals should be specific and measurable--such as boosting sales from the previous year by 20%.
2. Don't wait to reward small successes.
Not only should each person have very well-known short-term goals, but if people achieve their goals, the company should reward those people as soon as they do it. Those rewards ought to be denominated in praise and in points that can be redeemed for valuable prizes--like a trip to a nice destination or a shiny new iPhone.
The immediate reward will signal to the winning employee that his or her goals are important to the company and that you are paying close attention to how they are doing. And it’s a well-known fact of human nature that people crave attention from the boss--particularly when it’s a timely and meaningful reward for a job well done.
3. Use social media to make the company more aware.
If you’re running a start-up, odds are good that everyone knows what all the other employees are doing. And if they don’t, you should install a so-called social rewards platform--a Facebook-like corporate social network that lets the whole company know how people are doing--provided by start-ups such as Achievers and TemboSocial.
By making the entire company aware of how much progress people are making toward their goals, you can open up the floodgates of praise for employees. Simply put, any employee who admires the accomplishments of her peers can deliver a social reward. And that will surely boost the motivation of the recipients while teaching them the benefit of giving as good as they are getting.
4. Ditch the coffee mugs and T-shirts.
Research suggests that this kind of swag consumes some 1% to 2% of corporate payrolls--sucking up $38 billion a year. But if you run a start-up, you can take that money and use it to institutionalize the platforms that boost employee performance.
Achievers has developed an employee-engagement platform that many companies are adopting--because research suggests it lowers employee turnover by 31%, and this has resulted in rapid revenue growth.
Or you might consider trying TemboSocial’s The Hive. TemboSocial's CEO, Steven Green, calls it “a nonmonetary system of social recognition that changes how companies motivate and retain employees, how they celebrate success, and how they reinforce their corporate culture and values.”
The Hive, says Green, allows employees to “recognize a colleague, comment on the stories of others, and 'like' or share a recognition story.”
It produces illustrated badges that “build an employee’s personal legacy within the organization,” he says. These awards also include so-called “Daily Digest emails sent to managers to keep them up-to-date on the contributions of their employees.”
And, he says, it produces management reports on “who is being recognized for what,” and that helps senior managers to identify problem areas such as "departments or new acquisitions that are too isolated.”
There is no substitute for a powerful mission statement when it comes to attracting and motivating top talent. But when you want each person to do the right things every day, these four steps can advance your start-up ahead of the competition.
Strategy consultant, startup investor, teacher, corporate speaker, pundit, and author of 11 books, Peter Cohan has invested in six startups, three of which were sold for a total of $2 billion. Before founding Peter S. Cohan & Associates in 1994, he worked with HBS strategy guru Michael E. Porter.