Money not the only way to reward workers — try listening to them

THE current bitching about the outrageous salary levels enjoyed by top bankers is an aspect of equity theory, the idea proposed in the mid-1960s by psychologist J Stacy Adams.

Equity theory starts with the fact that human beings are involved, directly or indirectly, in relationships with others, and instinctively check the fairness or equity of those relationships. If one person gives a present to another, for example, and gets nothing in return, whether that be an acknowledgement or a bigger response, they feel hard done by.

During the boom years, the salaries enjoyed by top bankers did not amount to a major perceived inequity, because the basic relationship was positive. Since the biggest transaction in which most people engage is the purchase of a house, and since banks and bankers, at the time, were effusively eager to lend for that purpose, the fact that the top guy in the bank was paid multiples of what the house purchaser was earning wasn’t experienced as a personal inequity.

Once the projected soft landing turned into the hardest landing imaginable, however, the relationship shifted radically. Once the actions of bankers worldwide and nearer home brought the economy to its knees and crimped the living standards and prospects of the majority of people for the foreseeable future, the remuneration packages of top bankers moved front and centre, and a general demand grew for radical change, for someone to ensure that the salaries of top bankers were immediately cut down. Only a quantum shift in recompense would persuade the impoverished that the proper fairness in the relationship had been restored.

That preoccupation with bankers’ pay has undoubtedly distracted us from a more pervasive and societally dangerous problem that has emerged during the years of the Celtic Tiger. That problem is the fact that, in almost all enterprises, albeit most floridly evident in financial services, the incentive, the reward, the management weapon of choice has been money. And only money.

As a result, managers throughout many businesses have focused on providing bigger and better packages as a way of incentivising staff to work better. Whether it was commission, bonuses, pension contributions or share options, the factor that gave you the guide as to how well you, personally, were doing was money. It started in the private sector and leaked into the public sector via benchmarking.

This unprecedented emphasis on motivation-by-money has had a number of outcomes, all of them negative. The first can be found in the multi-national phrase “compensation package” with its implication that people have to be compensated for getting out of bed in the morning and dragging themselves to work.

To take that view of people as essentially passive and as motivated only by money is to do a grave injustice to human beings. People turn up for work for a multiplicity of reasons, including pride in what they do, the pleasure of completing a task, the fun of genuine sharing with colleagues, the sense of camaraderie delivered within a good workplace. People enjoy meeting targets set by — and with — people they respect.

However, during the boom years, a creeping management malaise resulted from the flawed view of the workforce as a bunch of venal greedy grabbers who could be focused and directed only by giving them fat pay cheques and fatter bonuses.

The pernicious end result of that view is that a whole generation of managers have never been trained in or have forgotten how to genuinely manage people. The recession presents us with a wonderful opportunity to re-learn the essentials of human relations. One of those essentials is that money is only a short-term motivator.

Research with children, many years ago, proved that if you reward a child for good behaviour with increased pocket money or another concrete treat, your action is counterproductive. It doesn’t ensure that the child continues to deliver the behaviour you rewarded. In fact, it may diminish the frequency of that behaviour as the child decides this is something to be done only in response to reward, not because it’s good in itself, and certainly not because it delivers an internal boost to the child’s sense of itself.

It is true, of course, that when people are struggling to meet their basic needs, money is absolutely central to them. But, as Maslow pointed out, once you get above basic subsistence needs, then other factors become more important than finance, except for the very few who are motivated solely by money.

Of much more importance than money, as a motivator, is the sense of personal achievement. The capacity to do something well. The conviction that one has delivered something valuable. Personal achievement is one of the key incentives driving human beings.

Linked to personal achievement is recognition by others. What the father of psychology called “the inestimable gift of your attention to another human being”.

One of the most vivid illustrations of that fundamental truth resulted from an early work study experiment in a place called Hawthorne in the US, where observers went into a factory to look at what made workers work well or badly. The observers were puzzled to find that productivity went up, in one part of the plant, when the lights were lowered in that section, yet when the lighting was intensified, in another part of the factory, the same thing happened. They eventually worked out that what was driving productivity increases had damn all to do with lighting. What was driving the increase in productivity was the fact that, for the very first time, someone was paying attention to the workforce and finding them interesting. Provided with that warming gift, the workers blossomed.

It’s screamingly obvious, this need for attention and affirmation by others. And it’s one of the most ignored and overlooked considerations in motivating people at work. I was horrified, recently, when preparing a woman for a promotion interview, to hear her say that, in 25 years in a public service job, she’d never been told she’d done a good job. Success was negatively measured by this executive and by her peers.

If you didn’t hear from Him Above or Her Above that you’d done something wrong, then you could presume you were doing OK. Dedication and passion went unnoticed. Self worth was never reinforced. The encouragement to tap into talents which had been noticed was never given.

Inevitably, in that situation, an executive ends up measuring themselves by what they’re paid. But what a bitter, coppery-taste-in-the-mouth measure that is. And how lethal a de-motivator it becomes when it is reduced in response to circumstances completely outside the worker’s control.

It’s worth pointing out that entrepreneurship is not based on money, either. The history of great entrepreneurs shows, again and again, that they were motivated by a desire for independence, by a great idea, by a dream shared with a pal — but almost never by the desire to be a millionaire.

This recession offers at least one barbed benefit — the opportunity to re-learn respect for the profoundly important non-financial needs of the workforce.