How do you motivate your employees?  Wearing many different hats, business owners may forget to take the time to evaluate what motivates their employees and whether they are getting the intended results.

Pay and Compensation

Many people assume that a high salary is a good motivator.  After all, the biggest reason I come to work is to receive a paycheck, not because I care so much about the company.  But I don’t think about my salary on a daily basis.  It gets direct-deposited into my bank account and over time, I start to feel like I am entitled to it just for showing up.  It is important to understand that base pay is used to attract talent and retain current employees.  It does nothing to make sure they are working hard each day they come to work.

Incentive (performance) pay, on the other hand, can be used to link rewards to outcomes deemed positive for the company.   This can come in the form of profit sharing, stock ownership, or bonuses based on performance appraisals.  Whatever you use, make sure the performance pay motivates positive behaviors, not just results.  Picture a scenario where a bonus is linked to a business metric, like market share, but the the employee uses poor behavior to achieve the goal to the detriment of the company.  Lastly, remember that incentive pay is the most effective near the end of the period when business results are evaluated, usually quarterly or annually.


Typical benefits, like medical, 401K, paid time off, have a similar motivating effect to base pay.  They really only matter during the hiring process.  However, nontraditional benefits can be highly motivating.  These might include things like flexible work hours, dogs at work, on-site daycare, or a company vehicle.  These things offer daily reminders that great results are the expectation.  Most small businesses are not able to afford these perks, but there are other things that can be even bigger motivators.

Growth and Advancement

Growth and advancement opportunities are essential to high employee satisfaction.  Satisfied employees stick around longer and work harder.  Showing them that you are willing to invest in their careers will also build trust, which tends to reinforce behaviors that are beneficial to the company.  Take time to sit down with employees and find out what their career goals are.  Put together a plan that includes training and mentorship programs that enable them to reach their goals.  While this sounds reasonable, some business owners may be tentative about developing an employee to the point that they require a raise.  In this case, it is essential that the training and advancements align with the company goals.  If they do, any increase in salary will be overshadowed by the added value to the company.  Finally, hiring an over-qualified individual with little room for growth is a recipe for dissatisfaction and poor performance.  This is especially pertinent during a down economy with many desperate applicants.

If you see it, say it

One of the most powerful motivators is also the cheapest.  Recently, I was given a new role with an important, but tedious task.  I completed the task and emailed out the week’s results to the team.  My boss sent me a quick reply with the words “this is good stuff, I like this”.  This was an easy, yet powerful way for my boss to show me that my work was appreciated.  The boss will always notice the big new client or the completion of a huge project, but how often do they notice the little things?  If you let good work go unnoticed, it will eventually go undone.  So take ten seconds and tell your employees you like what they are doing.  I know how much this simple gesture did for me and I know it will allow you to motivate your employees to achieve success.

What motivates you to work hard?  What motivators should managers consider for their employees? Share your ideas with a comment!