The hot topic these days is how best to deal with serious inflation, address labor competition and shortages, and make the right compensation adjustments to attract and retain talent. This often leads to company leaders contemplating general raises and juggling the consolidation between new hires and experienced current employees. Retention bonuses are also popular with employers, and such measures can be necessary, useful decision-making factors.
But the most successful leaders understand that getting these factors right isn’t the end of the game; it’s just the beginning. Without a competitive, fair, and logical compensation structure, you will end up with an unhappy workforce. However, addressing this source of dissatisfaction and reducing negative moods is not the same as building an engaged, productive, and positive team. This is much more difficult, but ultimately much more effective.
Seasoned leaders know that decent compensation, on top of amenities, benefits, and work-life balance, ultimately only serves to reduce current employee dissatisfaction. But the added value of this approach hits a hard ceiling. The better approach is to focus more holistically on workplace culture, knowing that working hard on the culture will achieve the larger goal of positive job satisfaction, motivation, and employee engagement.
Employers need to see the big picture. This understanding first emerged with clarity in the 1960s – supported by underlying research. But in the search for “magic fixes” (think “one-minute manager”), a fundamental appreciation of the primary importance of workplace culture tends to get lost. Secondary importance is also cited because workplace culture is so difficult to master.
The most influential thinker on this duality—reducing dissatisfaction versus increasing happiness—was Frederick Herzberg, who published Work and the Nature of Man in 1966. He explained the difference between “necessary factors” such as remuneration and those that are really sufficient for motivation. Herzberg argued that it is crucial to identify and distinguish those factors that are “outside” the body, such as: B. Compensation, and those that are “intrinsic” to work in the context of corporate culture. As a four-time CEO, I agree with Herzberg’s assessment that only intrinsic factors are capable of taking a team beyond minimal dissatisfaction into the realm of creativity, engagement, productivity, and other truly transformative outcomes.
A summary of Herzberg’s work eventually became one of the most influential and requested Harvard Business Review essays of all time, “One More Time: How Do You Motivate Employees?” And the bottom line was clear: once you’ve grappled with dissatisfaction with external details , positive satisfaction comes only from:
- Having a sense of accomplishment inherent in the job
- Having the opportunity to achieve and move forward
- To be encouraged and challenged for excellence
- Become empowered to participate and expand your role
- Understand and respect the value provided by your employer’s products or services, which guarantees profit and growth
In Herzberg’s words: “Forget praise. forget punishment. forgot cash. They have to make their jobs more interesting.”
But that begs the question, “Is this just a theory, like so many of the recipes du jour for managerial success?” Or is it backed up by data?” The answer is a resounding and resounding “yes,” and in many ways.
Included in Herzberg’s “One More Time” summary is a study of 3,500 experiences of workplace events. These were then rated by the employees in such a way that they led to either extreme satisfaction or extreme dissatisfaction.
All intrinsic factors were exponentially more likely to result in extreme satisfaction. At the top of the list (ordered by the number of mentions) were five times responsibility, four times performance, three times recognition and 2.5 times the work itself. Conversely, the extrinsic factors all received dissatisfaction mentions with even larger multiples of their satisfaction values. Corporate policies and administration resulted in 7x dissatisfaction and supervision 4x dissatisfaction, working conditions and personal life also 4x dissatisfaction. Salary was the least mentioned factor with a negative ratio of 1.5x.
In the two decades since the Herzberg summary, extensive studies have identified a tiny subset of companies that perform well over long time periods and across multiple business cycles. What do you think has led to their continued high performance?
Quite simply: the top performers got the intrinsic factors right. These factors are the basic building blocks. Moreover, the leaders who build successful workplace cultures know this and constantly address the intrinsic factors—it’s a daily process. Over time, the most successful leaders produce a successful outcome, but only because they trust the process to produce it in the first place.
Getting the compensation right is a necessary but insufficient part of a leader’s job. It’s just the beginning of a long process. What comes after is common knowledge and difficult to implement, but essential to success — and satisfaction at that.
Comments are closed.