Staff retention – Is it all about money?

I’ve been talking to a lot of clients recently about the challenges of attracting and retaining talent. Recruiting good people is a challenge and keeping them can also be a challenge. Pay rates are going up, but I’m not convinced that pay is always the issue.

The old adage is that people leave managers not jobs, but pay is linked to it, so I thought I’d set out some thoughts on how good a motivator pay is in retaining good people.

First of all, I must say that these aren’t really my original thoughts. Some of them come from Frederick Hertzberg, an American academic who come up with some of the theory in 1959 and some from my old boss from my banking days who came up with the great line, “If you work in a large organisation, you can always find some idiot who’s paid more than you.”

I used to do a lot of management and leadership training and motivation is something that managers want to know how to do. A motivated team achieves more and is usually easier to manage than one that is de-motivated.

The problem is that I can’t motivate you (or anyone else) and you can’t motivate me (or anyone else) to do anything. All we can do is to provide an environment where others are motivated to do something.

But, back to money as a motivator. When presenting on this, I always ask audiences the question, “Hands up anyone who wouldn’t like to earn more”. I’ve not seen a hand yet. We could all cope with more money and, if we really did have too much, we could always give it away to good causes. So is money a motivator? My wise old banking boss also used to say, “We could all find a job that pays a few grand more”. The current economic climate might make that a bit more tricky, but it’s possibly still true. So why don’t we?

That’s where Hertzberg comes in. He identified two types of attributes, which are commonly called motivators and hygiene factors. A motivator is something that actually motivates us and makes us work harder. A hygiene factor is something that doesn’t motivate us, but its absence can de-motivate us. Think about a nice smart new workplace. If you have one it’s very nice, but the novelty wears off and we get used to it. If we have to put up with a cold, damp, dirty workplace, that might really make us fed up. So the physical state of the workplace (and especially the loos!) is both literally and metaphorically a hygiene factor rather than a motivator.

The motivators are around achievement, recognition, responsibility, the work we do and the respect we have for our manager. The de-motivators are around facilities, policies and procedures and poor supervision. Obviously some areas can be motivators or hygiene factors depending on how they are used.

So what about salary? Hygiene factor or motivator? We all want to earn more! We all know roughly the going rate for our job. I know what a solicitor earns, an IT person knows what an IT person earns, a sales person knows about sales salaries and you know the going rate for your job. If you are paid there-or-thereabouts and everything else is right you’ll be reasonably happy in your job. If you’re paid more than the going rate, will you do more, work harder, be happier? One thing is for sure; if you’re paid less than the going rate for the job, you will be fed up and, assuming you can, you’ll look to leave and get another job which pays the going rate.

That causes the organisation a problem. It has to replace you, incur all the overt and hidden costs of recruiting and training a new person, and probably pay them the going rate. It is usually short term to underpay people. It’s also uneconomic to overpay people as, if your competitors are paying less for staff, they may be able to undercut your prices. The skill for an organisation is to pay the going rate and then to motivate its staff using motivators rather than hygiene factors.

If you overpay people who are unhappy, but overpaid, you then create what I call “hostages”. These are people who want to leave, but can’t afford to. Hostages can then become “terrorists”, but that’s another blog! (No names – but are you thinking of anyone?)

Lawyers always have to throw a bit of law into their blogs. The first legal bit is of course the National Minimum Wage; paying less than it is not only de-motivational, it’s also illegal. Do be aware of equal pay regulations too. Seeing a male colleague paid more for the same job would also be both de-motivational and illegal.

If someone really isn’t up to the job and all your training and motivation hasn’t worked, you may need to make the difficult decision to get rid of them. Not tackling a poor performer is de-motivational for the rest of the team. A good employment lawyer can help you navigate the choppy waters of dismissal for competency and capability issues.

So, if you manage people, use salary surveys and market knowledge to make sure you are paying people you want to keep the right salary. Then look to motivate them and sort out any hygiene factors that are de-motivating them.

It’s easy to think motivation is about money. It can be if it’s under the going rate, but otherwise it’s just a hygiene factor, like a dirty office.

If you want to talk about this, please contact Mark on mark@bernnerttbriegal.co.uk or on 07983 283678.