Too many managers think that they can only motivate people if they have the chance to offer them a bonus. In some cultures, it is considered rude or embarrassing to talk about money at any time. In other cultures, men may talk about money, but not women. Individual attitudes to talking about money vary, even within similar cultures, but as a manager, discussing salaries and bonus schemes is unavoidable, with any of your team, no matter their background.

Let’s begin by reminding ourselves that money is not a driver of performance, though it drives some of our decision making: We may choose to accept one job rather than another, based on the pay. Extreme desire for money can motivate people to rob banks, defraud their employers or deliberately destroy a colleague’s career. Extreme need for money can motivate people to beg in the streets, steal from others, or put up with appalling working conditions. Our attitude to money influences the choices and decisions we make; it rarely affects how well we perform at work. As far back as 1964, Frederick Herzberg showed that when an employee considers their reward essentially fair and reasonable, paying them more will not, of itself, motivate them to improve their performance. Money is nothing more than a hygiene factor in motivating people; pay needs to be enough to recruit and retain the right people, but does not make a big difference to their performance.

Money has an emotional value that is not directly correlated with its actual value in terms of purchasing power. To understand how our decisions are influenced by variable pay opportunities, we need to understand the emotional value of money to each of our team. Understanding the role that pay and reward plays in each of your employee’s lives is an important part of your role as a manager. We all have a different attitude to money and different priorities when spending it. But very few of us are ‘rational economic operators’, beloved of those who design pay policy. Our current circumstances also change our attitude to money. Two people, who apparently live in very similar circumstances, may actually have very different financial pressures and so react differently to the reward on offer. If you do not know that one of the team is having to pay for the care of a relative, or another has received a significant inheritance, you will not understand their attitudes to money. So before exploring colleagues’ motivations, take some time to understand your own perspective.

Your organisation may have some aspects of variable pay that you have to manage. There are some good reasons for variable pay, which include: Enabling total cost of pay to change – as profits/cash/budgets change – sending clear messages to people about what really matters and creating a sense of ownership among the workforce as they share in the benefits of success. If you have a role in setting the pay for a job, you need to offer enough, with sufficient flexibility, to attract the right calibre of people and to prevent the good performers leaving just for more money. Money is a score keeper and highlycompetitive people want the highest score. Earning the most money is often about being the winner in the game, rather than any specific focus on the amount of money involved. So what is the primary consideration between rewarding team-working against individual performance? The most common form of variable pay is individual performance-related pay (PRP). Many organisations that use individual PRP, also say they want employees to collaborate more, work as a team and step out of their silos. The contradiction is not often discussed, if you must award bonuses based on individual performance – at the same time as encouraging teamwork – include ‘contribution to the team’ in your assessment of performance. It’s not a perfect solution, but it is better than nothing. If there are variable aspects to pay, your employees will want clarity. For example, can they work out for themselves how to influence the variable aspects of their pay? Can they work out for themselves how their pay will vary in a given situation?

If you are responsible for some aspect of variable pay – such as a performance rating – you need to build trust into the decision-making process: What data will you use? Who has access to the data? Who makes the decisions? How will decision making be managed and communicated? Is there a process to challenge decisions? If you don’t talk about money, it remains the elephant in the room. To be confident in your conversations about pay and reward, you need to: Understand the complexities of the emotional value of money; let go of any false beliefs about money as a driver of performance; fully understand the organisation’s reward policy and develop sufficient trust with your team to talk about the importance of money in each of your employee’s decision making. Remember too, you cannot manage performance well if you think that the bigger the bonus the higher the performance. There is very little correlation between our satisfaction with our pay and our satisfaction with our job.

There are times when your team may feel that they are being treated unfairly in respect to pay. Two common situations arise when people don’t receive an expected pay rise or bonus, or when they find out that others are being paid more than they are, for what they see as the same work. Remember that the amount of money at stake it not always the issue. The problems caused are just as likely to be when people feel unfairly treated, feel that others are valued more than they are and that their contribution isn’t understood or respected. They may feel stupid for not negotiating harder when they accepted the job, that they have been deceived or have been taken advantage of. You may know people who stick with jobs they say they hate because of the money. You may know people who accept lower pay than they could receive elsewhere, because they love their work, perhaps you even envy them. What you may not know is that most of us are in one or other of these camps. So, are you in your job despite the pay, or because of it?

FOR FURTHER INFO WWW.3CPERFORM.CO.UK

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