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Motivating Without Money

Motivating Without Money

By Matthew Boyle | BusinessWeek

But how? First, managers must be motivated themselves. Body language is the key here—employees won’t believe your inspirational missives if you hide in the office all day. “How can you motivate your troops when you’re down in the dumps?” asks Joan Caruso, an organizational effectiveness consultant with the Ayers Group of New York who works with banks like Goldman Sachs. “We live in an age of e-mail, and it’s easy for managers to hide behind that,” says Steve Church, chief operational excellence officer at Avnet, a technology distributor based in Phoenix. “But employees need to hear from us in person.”

Creative Compensation

As far as what to say, money still talks—at least for companies in a position to dole it out. Both Google (GOOG) and Starbucks (SBUX) have instituted option-exchange programs where employees can trade out-of-the-money stock options for fresh new ones. But such option exchanges “are a sticky issue,” says David Wise, a senior consultant and compensation expert at consultancy Hay Group. They can arouse the ire of shareholders, who aren’t included in the offer.

Software developer Intuit (INTU) had a different approach. The Mountain View (Calif.) company, maker of TurboTax, mulled several choices in late 2008 to keep employees engaged, including an option-exchange program and a cash-retention bonus. But in the end Intuit decided on accelerating the timing of its annual grant of restricted stock units (RSUs) to February. Such a grant normally would occur only at the end of the company’s fiscal year in July.

Intuit human resources vice-president Jim Grenier says he preferred RSUs over stock options because RSUs, unlike options, always have value no matter what happens to the company’s stock price. Excluded from the special grant were senior vice-presidents and above, as well as new hires and the lowest-performing 5% to 10% of employees, based on the most recent performance assessment. “We don’t want to pay just for pulse,” says Grenier, adding that employee engagement scores have not dropped off, even though Intuit conducted layoffs last summer.

Making Recognition Personal Not every company is in a position to made a huge equity grant right now. But small gestures can go a long way during difficult times, so many firms have recently turned to an Irish outfit called Globoforce, which designs corporate recognition programs for clients like Intuit, Procter & Gamble (PG), and Dow Chemical .