How do I motivate them? The first lever.

In 2009, the UK was hurting due to the global financial crisis. At the time I was working for the premium salon and spa brand in Business to Business (B2B) sales. I was new to the job after being a floor manager in the brand's Centre of Excellence in Covent Garden, London. I had been working in luxury brands for a while to this point and it became the norm to see people spend seemingly extravagant amounts of money for products and services while the media bombarded us with catastrophising headlines. What I learnt during this time was that value comes in many forms and the biggest mistake often made by leaders is to make drastic decisions that increase expenses (or effort) and lower revenue (or returns) simultaneously.

My biggest client on my accounts list had over 20 staff and had just finished a Spa renovation when I first visited them to begin our relationship. The business owner, Helen and her husband started our meeting by giving me a tour of the new Spa rooms they had installed to grow the business. Then, before I could outline my agenda they told me they had decided to simultaneously drop prices and had given all staff a raise. It was brave and the ambition to do everything they could to 'power through the downturn' was as surprising to me as it was honourable. Their first decision around the renovation to create spa rooms was one I thought was a good idea. It would add a new revenue stream, as well as create cross-selling and up-selling opportunities for their business in a way no other activity could. The other two decisions made me nervous. Cutting prices while cutting profits (through increased wage outlays) is what I call 'cutting yourself at each end' . These are decisions with good intention but rarely have the desired effect.

Firstly, dropping prices as a premium brand is like trying to lose weight by starving yourself. On the surface it may appear to be the obvious thing to do but will only do harm. When was the last time Gucci, Rolex, or Jimmy Choo went on an EOFY sale? The never have, as lowering the price will lower the perceived value of the brand. The majority of customers of these brands do not shop for these items on price comparison. They are mostly driven by the experience and the status that comes with being one of the few able to wear or be associated with the brand. They may also appreciate the uniqueness, heritage, prestige, or craftsmanship of the brand also. If these brands were to slash they're prices, then the point of shopping with them would dissipate. For similar reasons, I felt this client was making a mistake by dropping prices.

But, the bigger mistake was raising their staff's pay for no apparent reason other than the economy. The staff were already earning an above-industry standard wage, especially given the location they were in (Semi-Rural). To date, the staff had not performed to a high standard so this was not an earned raise in salary. In fact, I later became aware that most staff were underperforming to this point. I also came to realise the raise was being given when the salon was financially fragile due to the recent spa rooms renovation, making the business less stable for the tough times coming in the general economy. As a young consultant I did not have the confidence to raise my concerns, but I wish I had. Helen was basically trying to bribe her staff to care more and perform better, but had unknowingly started a vicious cycle she would not be able to unwind. What I now know is that you cannot buy motivation...   

Human motivation is a complex concept. One way to look at motivation is through the lens of the Triune Brain Theory (Paul MacLean) which says we have three brains; The Reptilian (Primal), The Limbic (Emotional), and The Neocortex (Rational) Brains. This model is not anthropologically accurate, but is widely accepted as the best way for us understand how and why we act like we do in the real world. Within this model the Primal Brain can only react to stimulus with one of its main functions being to keep us safe (motivates us to get out of harm's way). The Emotional Brain generally attaches understanding and creates feelings associated with stimulus (motivates us to increase or decrease connection, to care or not care, etc etc). The Rational brain dreams up solutions to solve problems (motivates us to engage with problems and think through them).

With this we can deconstruct why Helen's plan to motivate staff through increased pay was doomed from the beginning...

You can't buy safety (Primal)

We all need money to feed and shelter ourselves. When this is at risk we feel unsafe and will do whatever it takes to look after ourselves and our DNA (i.e. family). Sometimes we feel these are the stakes in play when dealing with our team members. Helen felt this in a way. She felt if she could remove the doubt and fear being created by the state of the economy then the staff would feel safer and more motivated to protect and drive the business. But Edward Deci's (MIT University) classic meta-analysis of 128 controlled studies tells us this type of incentive can decrease people's sense of safety. It is so counter intuitive you will not believe the following passage:

Paying people more lowers performance!

Deci explains that intrinsic motivation (internal drivers like learning or satisfaction) can be diminished by the extrinsic motivation (external drivers like incentives or benefits). Economists, Sociologists, and Psychologists generally agree to this because the money brings with it pressure. If we get the chance to earn significantly more money, then all sorts of weirdness pursues. People can become protective, overly competitive, and basically nervous. There is always context, but fundamentally incentives and noticeable pay rises turn people's attention away from the work and onto the cash, or more importantly the cash they can miss out on. The only way money helps to motivate is to pay people well enough on a base salary so they are not worried about paying the rent or putting food on the table. If we are in a professional setting and we are able to meet these pay standards then we may cause more harm than good by offering monetary incentives. 

You can't buy satisfaction (Emotional)

Contentment in our work comes from many factors. Our earnings are one contributing ingredient to contentment, but it is not as influential as we may assume. In fact, it accounts for less than 2% (taken from a review of 120 years of studies from 92 independent studies, Judge, Piccolo, Podsakoff, Shaw, Rich, 2010). You would think being paid more would fill us with joy, connection, and a feeling of appreciation. Possibly even gratitude and love for our work and our employer. But this research suggests our satisfaction with our pay is not even effected by the pay itself (less than 5% of people equate the amount they earn with how satisfied they are with their pay!)

Yes, we are weird creatures indeed. Poor Helen had no idea what she was dealing with.

Ultimately, our joy and enthusiasm (or any emotions we feel) to perform in our work tends to be driven from intrinsic factors. Money, unfortunately (or fortunately) is almost powerless in turning on our emotional brains to motivate us and create higher levels of satisfaction in our workplace.

You can't buy engagement (Rational)

Engagement has become the buzz word of People and Culture (or Human Resources for the old skool). It refers to how present people are at work and how committed they are to solving the problems within their remit. When we are at work the rational brain may be asking itself 'why am I here?' or 'what am I meant to be focusing on or prioritising?' This leads to a cascade of questions at the core of engagement: How interested are people in their work? How much do they care about the work? How focused are they on their work?

The interesting thing is that people at the top of the food chain do not show more interest or care in their work even though they have fatter pay packets than those towards the middle or bottom rung (Gallup, 2011). Also, older people and participants with higher education levels reported lower engagement. These are generally our leaders in organisations. If they are not engaged then how can we expect the troops reporting to them to be highly engaged? I wonder how engaged Helen was in her business at the time. As a non-hairdresser herself was she present in the day-to-day in mind, body, and spirit? On reflection, my humble opinion is that I don't think she was.

Once again, more money does not guarantee more engagement. It is a reality we need to familiarise ourselves with. We simply cannot throw cash at the problem if people are not showing the care, attention, or mindfulness in their work we want or expect.

Money and incentives tend to be the first lever most leaders pull to encourage performance. But the research clearly shows when people are demotivated or performing below standard then, one of the worst things we can do is chuck money at them (in any form). If anything it can cause stress, nervousness, or even entitlement. If our people are being distracted from their work because they can't afford the next electricity bill then we need to have a different conversation. But, most professionals in our teams do not thankfully have this problem. We must decipher between want and need on this front. Therefore, monetary incentives of any description will have limited effect, and will usually gain outcomes short of what is hoped for.

Instead, can we use incentives as occasional chances to add a bit of competitive spice or fun to what the team are working on? Much like betting on the golf course. Lovers of golf are performing as well as they can every time they go for a hit. Golf is a difficult sport in more ways than I can describe. When mates decide to add a little edge to the game with a few bets and it can make for a few extra laughs and a bit more interest. But when bets become a little larger (i.e. "I'm scared to lose the bet because I can't afford it") or becomes the main focus (i.e. "betting is the main meal and golf is now the side dish") then the central fun of the game diminishes to zero, performance lowers, and can even demotivate us to want to play at all.

If we want to motivate our team we need to think deeper and more creatively than just trying to pay for it. It is one of the realities of leadership none of us can change and must accept. The good news is that we have an abundance of other options I'll work through in coming Boot Room Articles.

You may be asking, what happened to Helen? The salon's account with my business contracted over the coming 6-12 months. Every time I visited there were less and less staff. The last time I visited the salon there were approximately three staff, the spa was not being used at all, and she was speaking to me about planning to turn the salon into a cafe. It was heartbreaking. We formed a close relationship and it broke my heart when she closed the business and her account with our brand. I wish I knew then what I know now.