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Is there a link between Salary and Motivation?

I often hear the claim that salary is the key to employee motivation. Every time, I ask whoever said it - what makes their work interesting? Why do they stay long hours after work even though they aren't getting paid for extra time? The answers are usually in the range of "my responsibility", "I'm significant", or "people listen to me".

"And where is it expressed in your salary?" I ask. Here is where the conversation usually ends. I'm under no illusion that I've convinced my companion, although perhaps sometimes I have. Let's talk about the real factors that generate motivation and interest in work for everyone.

What creates employee and management motivation?

The subject of motivation often arises in my blog (the link will take you to a number of articles on the subject). In one of my articles, I refer to the Hawthorne effect in creating employee motivation.

I highly recommend you read the article, but in brief, the Hawthorne Effect is a phenomenon detected by researchers at Harvard between 1927 and 1935, at the Hawthorne factory, which was the largest of Western Electric's companies.

To their surprise (which resulted in the experiment being continued for another 8 years), the researchers found that when they took a group of female employees and developed

them into a special team, granting them significance and fair treatment, their performance increased sharply, regardless of work conditions or salary.

Has evolution produced any types of people who are driven by various motivational factors?

Another claim I often hear is that there aren't enough employees in traditional industry like the ones in hi-tech. But has the last forty or fifty years in which hi-tech has developed created different people? Or are managers or engineers specific types of people who are driven by different factors than their neighbors, the production workers who live down the street?

When I consider this generalization, I have to disagree. At least not among the thousands of people I've met, particularly in Israel.

People are driven by similar factors, regardless of whether they are managers, engineers, IT people or production staff; but production workers have a smaller chance of being exposed to these motivational factors. And these factors are what generate interest in our work and keep us motivated.

Interview in The Marker with one of the world's most influential HR specialists

The Marker has interviewed Josh Bersin, the founder and CEO of a research team belonging to the global Deloitte Group. Bersin has been termed one of the world's most influential HR specialists, with his "Five Principles in Becoming a Simply Irresistible Boss".

Bersin's five principles refer to work environments in the era of "disruptive innovation". One may get the notion that he directs himself mainly to the world of hi-tech, but his conclusions correspond wonderfully with the research conclusions obtained at the Hawthorne factory 90 years ago. I have already written that evolution has not managed to create a new human over the last several decades. Much has changed, but the factors that motivate us have not.

The following are Bersin's Five Principles.

  1. Meaningful work. Granting employees maximum autonomy. In the language I use, it means the employee feels significant.
  2. Hands on management. Management practice based on trust and appreciation. Forget the annual feedback discussion to foster personal familiarity with your employees, and work with multiple evaluation discussions throughout the year. In other words, you should give your employee regular feedback and appreciation. Particularly positive feedback, but also teaching and correcting, as a mentor (see an article I wrote two weeks ago).
  3. Humane and positive work environment, whose cornerstones are: transparency, fairness, humanism, variety and flexibility. I don't know one employee whose emotional connection with the company and motivation wouldn't increase from these principles.
  4. Opportunities for growth. "An irresistible organization encourages people to learn new things all the time and to implement them in the organization", says Bersin. The principle of constant learning is one of the principles of thin management and applies everywhere. Elsewhere on the Internet, Josh Bersin is quoted as saying "The single biggest driver of business impact is the strength of an organization's learning culture".
  5. Trust in leadership. "In the model, this is the fifth principle, but I think it's more important," says Bersin. "The biggest mistake of senior management today is that they don't understand that while the product is important, only through HR management will the organization become truly successful. Studies have proven that more than 70% of CEO's feel positive that technology is more important than people, who can be replaced. That's a big mistake."

Not long ago, I gave a lecture entitled "Managing a company's relative advantage". In it, I claimed that the workers are a company's relative advantage. Afterwards, a manager of one of the hi-tech companies approached me and suggested that I was only referring to employees in traditional industry. I told her about Josh Bersin's ideas, which do not refer to traditional industry's employees.

Even Bersin doesn't mention salary as an influential factor in an employee's connection or motivation towards the company, or in the boss becoming irresistible.

I'm always happy to rely on the ideas of people in high places like Josh Bersin. And my theory and credo, which I often state in my blog articles, are not my original creations, but rather stem from learning from experience and studying the Toyota Production System (TPS) or from managers like Jack Welch.

Why do so many managers point to salary being the reason for their employees' leaving or low motivation?

I think there are several reasons for this:

  • First, salary is a clear and known factor. It's easy to identify and to blame its effect on employees even when there is no effect. The factors I stated above are harder to detect and require a change in thinking.
  • Second, employees with low motivation who do not feel a connection with the organization will be more likely to complain about their salaries.
  • And last, because an organization's financial situation may mean salaries can't be raised, the CEO is therefore exempt from any action. The factor in this situation is an external one and the CEO can't do anything to change it.

So, when does salary have an effect?

Salary has an effect as a comparative variable. If I receive a salary (or raise) that is higher than my friend Joe's, I'm happy. If Joe gets a higher raise than mine, I hope the company burns down, because it's not fair. Except that the salary isn't the factor – it's the appreciation I receive.

The raise in salary (or the size of my company car) signifies the appreciation I received when I got more. Alternatively, if I receive less, the effective factor is my perception of the lack of fairness towards me. Therefore, in this case, it isn't the salary that is influential, but rather, what it signifies.

Can employees be bought with a high salary?

Yes, certainly. But the real question is what will happen a few months later when the employee leaves the company for an even higher salary.

An article published this week in The Marker states that "Amazon is attacking Israeli hi-tech and raising employee salaries". Employees might move over to work at Amazon (or any other company that offers them a considerably higher salary, but after a few months, they will become used to their new salary and will begin to search for the five principles that Bersin presents as being important.

Summary and recommendations

Salary does not affect motivation. Because we need to make a living and we are usually looking for something interesting in life, we try to combine our two needs: to make a living from work that will be interesting and significant.

When we are faced with the choice of working at an interesting job with fair treatment and a lower salary, or at a job where the salary is higher but the working conditions are terrible and treatment feels unfair, we will choose the first scenario, even if the salary is lower.

I recommend that you nurture your employees' motivation and harness them to the company using the five motivational principles that Josh Bersin suggests, as described above.

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