As the economy gains momentum, what is the most effective area for companies to increase spending on employees?
Companies often default to spending money on financial incentives, partially because they believe money is what counts to employees. In the McKinsey Quarterly article “Motivating People, Getting Beyond Money” (http://bit.ly/93Dj87) their survey indicates that companies should seriously consider non-financial incentives. The three keys areas the survey recommends to focus on are:
- praise and commendation from their manager
- attention from leaders, such as one-on-one coaching
- opportunities to lead projects or task forces
In the survey all three of these areas were considered to be more effective in motivating people than any of the financial compensation options. Plus the non-financial options do not increase the long term cost of employee benefits allowing companies to remain more flexible should the economy sputter it’s way to a recovery.
What gets in the way of companies implementing the non-financial options to engage and inspire employees? My observation is that there are three
reasons why companies don’t invest more heavily in the non-financial options:
- It is difficult to tangibly measure the immediate impact and long term value of having higher quality connections with employees.
- Management has so many other immediate short term tasks on their to do list that undertaking a longer term strategic program of increasing contact with their people gets pushed to the side.
- No one ever really taught us how to communicate and as managers we don’t know how or don’t feel comfortable giving recognition or having one-on-one conversations with our direct reports.
Impacts of Coaching
An earlier post (http://bit.ly/baLMhE ) indicated that the average return on coaching is 6 times the investment. This is usually a short term return and does not take into account the long term learning benefit that the person being coached gets to repeat year after year. Nor does it take into account the long term learning benefits that a manager may generate with their direct reports.
I believe learning how to communicate and coaching the people that report to you will give your company the best return in the long run. Unfortunately it is not the easiest or fastest answer. It requires a commitment on the part of management to learn a new skill, practice and take the time to connect with their people.
With an investment in non-financial initiatives now companies could exit the down turn stronger than they entered it.
Jacque
