How Small Businesses Can Compete & Beat The “Big Dogs”
As a small business services consultant, one of the questions I get asked most often is: How can my business compete with big companies to win top-tier candidates?
Contrary to popular belief, you don’t have to pay more or offer ridiculous benefits. And you won’t have to give away all of your profits in bonuses either…
Sure, it’s true that money is what motivates the VAST majority of us to come to work everyday. It’s also true that what we’re each willing to do and even not do increases with the size of a job offer.
But researchers have uncovered a really surprising trend that puts much of the current thinking about employee compensation on its head. And it’s good news for the small businesses that, up to this point, have been fighting a losing battle with their much larger rivals.
It all has to do with a growing pool of research on what truly motivates us.
According to author and researcher Daniel Pink, offering the right working environment is the key to securing the best, most productive workers. The best incentive, Pink says, is a mixture of both monetary and intrinsic compensation — otherwise known as autonomy, mastery, and purpose.
I’ll come back to those in a moment…
The Biggest Lie in Business Management
First, let’s clear up one of the biggest misconceptions of 20th century business management systems: Incentive based salaries are NOT the best motivator for jobs that involve higher-level thinking.
Sure, if you’re shoveling gravel for a living, then performance-based bonuses will cause you to work longer hours, shovel faster, and take shorter breaks.
As you go along, you’ll continue to push your stamina and efficiency?until you plateau and that’s your ceiling. That’s as hard as you can work. Once you’ve hit this point, you’re operating at what we in the small business consulting services world would refer to as peak performance?thus, you’ve been adequately motivated.
So, what if you weren’t shoveling gravel. What if you were solving logistics issues? What if you were an engineer trying to create the most efficient design for a suspension bridge?
Do you think the added pressure of compensation that rewards you for working faster, and with fewer, shorter breaks will make you a better engineer than someone who’s earning a flat salary?
Of course not! It may actually put you at a disadvantage, because you will take less time to explore new design options and testing data. You may overlook something in your attempt to work quickly that may cost your design firm dearly in the long run.
Researchers are now discovering that two things are happening it the example I’ve given above. First, the pressure of potentially making a bonus is creating stress for the engineer — reducing creativity, flexibility and oversight. That’s another way of saying that stress gives us tunnel vision.
Second, all the intrinsic motivations that make an engineer good at his or her job — such as pride, thoroughness, testing, etc. — are being repressed by the very thing that is supposed to enhance them.
In the small business consulting services industry, we’d call that a DISASTER.
Present the Right Opportunity
What does this have to do with small business?
It means that small business owners need to learn to leverage this research in a powerful way to attract the best in any field — simply by acknowledging the research and creating an environment that provides the proper motivation for employees.
By constructing a work environment that promotes the right intrinsic motivational factors – the drive to become the best that we can be — as well as a competitive salary, smaller companies will be able to attract the best workers and — just as importantly — keep them longer.
You’re probably wondering exactly what that kind of job offer may look like. I mean, it’s not like business owners all have PhDs in motivational psychology or anything.
Thankfully, Daniel Pink has distilled that research into three key areas of motivation:
Autonomy – One thing that’s rapidly changing thanks to technology is the ability to work remotely. While that may scare the pants off of many authoritarian CEOs in the corporate world, this could be a major plus for small business owners.
According to research, autonomy is one of the primary motivators for higher-level tasks. That means the remote or mobile workplace isn’t something to fear, it’s actually something to PROMOTE.
For a great many professionals, the freedom to work when and where they choose is worth quite a bit of money. Thus, you may actually be able to pay them less than a larger company who wants to relocate them or move that employee into a cubicle in an expensive office building.
Mastery – Any key motivation factor that research has recently uncovered is the ability for employees to be among the best in their field. The intrinsic value to produce the best results, conduct the best research, or obtain the highest skill level is also an extremely valuable replacement for monetary compensation.
Sending employees to additional training, conferences, etc., will actually result in more motivated and satisfied employees. Many employers shy away from these types of additional certifications for their current employees, yet look for them in a new hire.
Some business owners fear that they’re training their employees right out the door. Research, however, doesn’t support that narrow-minded view.
Purpose – Lots of people wonder why school teachers, although their salaries are capped, continue to teach year after year. The answer: Purpose.
When an employee believes in the goal that a company is working toward, they’ll be more satisfied and remain more motivated. That’s the reason study after study confirms the importance of core values and missions statements.
Giving employees something to believe in is essential to motivation. And just as in the example of school teachers, it keeps them satisfied — even at lower, capped salaries — for longer than many other professionals stay at their positions.
Boost Motivation and Morale
Clearly, the science of motivation is far from simple or straightforward, but we now know that, in today’s high tech world, that it’s really not all about the money. Thanks to the power of that intrinsic motivation that drives us to be the best we can be, the outlook is good for small business owners who are willing to take an unconventional approach.
After watching Pink’s TED Talk entitled, ?he Surprising Science of Motivation,?you’ll have a much different view on how compensation affects employment. Most importantly, you’ll understand how to create value for you employees, simply by adapting your employer-employee relationship to the modern workplace.
A straight salary, one without performance-based incentives can be just as satisfying for today’s highly skilled employee — as long as the opportunity offers the intrinsic values.
By harnessing the right motivators, you can offer an employment situation that attracts the right people without having to shell out the massive recruiting dollars. That’s not to say that this is a cost-cutting strategy, but one in which both employees and business owners can reduce volatility.
Creating an environment in which you leverage autonomy, mastery, and purpose — instead of higher commission-based salaries — may allow you to fix more costs and even pay smaller salaries than a massive corporation.