News & Articles

Human Resource Management
Published in the Rochester Business Journal
July 1, 2005
© 2005 HR Works, Inc.

Beyond dollars, cents and stock options:
Creating a climate of motivation for executives

By Candace Walters

HELP WANTED: Senior executive, with proven experience in growing a business or a corporate division, to take promising small firm to the next level. Send resume and salary history.

Most entrepreneurs and business owners have an important characteristic in common: They’re high achievers who are motivated by the sheer joy of their work.

As business founders move to grow their organizations, however, they must hire additional competencies, and the senior-level executives who can offer those skills will expect realistically competitive total rewards and compensation packages.

For small to mid-sized companies with limited resources, offering the exorbitant compensation deals that some large corporations favor is not an option, and small-company founders may wonder how they can possibly compete for top talent.

The good news for smaller companies is that talented executives are often driven by factors other than money. By nature, successful executives -– in all size organizations -- are high achievers who thrive on achieving goals.

Small businesses looking to hire these types of people can create very attractive packages and environments for senior managers -– particularly those who are tired of corporate bureaucracy, which may hinder them from fulfilling their fondest professional aspirations.

Theories on motivating high achievers

In creating a rewards package that will attract the right type of senior talent to a growing organization, small-business leaders would benefit by understanding what factors motivate such individuals.

Twentieth-century motivation expert Frederick Herzberg conducted research spanning several decades that highlighted an enduring truth: Motivation is not something that can be done to someone, using a carrot or stick approach that he called the “KITA method.” Instead, genuine motivation comes from within a person. Therefore, companies that want to get the best work out of their senior managers will find ways to turn on those “internal generators.”

Research conducted by David McClelland, another motivation expert, confirmed that high achievers tend to be interested in personal achievement and the job itself, more than just external factors like pay and benefits. They’re driven to solve problems and to win, McClelland found.

McClelland also looked at risk-taking, and found that the typical successful entrepreneur or business owner is neither a reckless gambler nor a conservative. Instead, these high achievers often embodies an attitude of “aggressive realism” – the desire to take on a series of moderate risks, confident that their efforts and abilities will influence the outcome.

In addition, McClelland found that achievers habitually stretch themselves and spend time thinking about doing things better. If praise is to matter to them, he continued, it must focus on their work, not on their personal characteristics, because being popular isn’t as important to achievers.

And money? Achievers see it as a measurement of their performance and of how they stack up against others’ performance, McClelland learned. They tend to respond very well to financial rewards tied to short- and long-term business results. And while high-achieving senior managers certainly want compensation that allows them to live comfortably and reflects their track record of success, after a certain point, it is not as essential as the accomplishments.

The evolution of the workplace

In examining modern-day motivators, it’s important to note that the world of work has changed dramatically since the decades in which Herzberg conducted his research, says Andrew DuBrin, professor of management at the Rochester Institute of Technology College of Business.

“Herzberg’s theory highlights the importance of exciting, interesting work,” DuBrin says. “All executives (are drawn to that kind of work). But today’s executives, when deciding whether to stay with a company, are also strongly motivated by the benefits package.”

What has happened to transform this external element – one of Herzberg’s “hygiene factors,” which held the power only to demotivate if it were absent or insufficient – into a true motivator?

DuBrin notes that generous health benefits, pensions and job security were the norm in the 1960s, and therefore held no power to motivate because employees expected them. Today, however, as fully paid health coverage has become rare and some employees have seen their promised pensions disappear, the appeal of a strong benefits package is clear.

The small-company edge

But offering a robust benefits package will hardly be enough to attract and retain the best senior managers.

And that’s where small companies may enjoy some advantages, DuBrin observes. They are more likely to offer an exciting business model and workplace environment that feature the kind of autonomy, control and opportunity that achievers crave. Particularly for risk-takers and entrepreneurial types, who are ready to do more than run a department in a large organization, the chance to achieve business success by developing and executing one’s own vision can be irresistible.

Also deeply satisfying for many executives is the opportunity to build something, DuBrin says – enhance a product line, expand a company’s reach, provide employment and bolster suppliers’ businesses. And most senior executives are so confident they will succeed that they eagerly accept a compensation package with significant performance-related bonuses.

“An effective senior executive should be seen as an investment, not a cost,” DuBrin says. “He or she should pay for him/herself” by improving the company’s performance.

Small-company executives also often enjoy the freedom from stockholder pressure for short-term profits that would otherwise derail long-term plans. In addition, the variety, stimulation and fun often not found in a large corporation exert a strong pull. As evidence, DuBrin points to the senior managers who leave corporate America to open a sandwich franchise, working long hours for little pay, thriving on the opportunity to build one’s own enterprise on the strength of one’s ideas, tenacity, vision and work ethic.

Caveats for small companies

While many small companies will find themselves able to attract executives who previously worked for large organizations, retaining those professionals will be difficult if:

• Board members or owners insist on meddling, thereby destroying the very autonomy the CEO or senior manager deeply craved when accepting the position.
• A former big-company executive, accustomed to support personnel and an established structure, proves unwilling or unable to learn the multiple skills necessary for succeeding in a small firm.
• An executive who thinks she or he would like to run a small company in fact lacks the necessary entrepreneurial temperament.
• The small firm proves unable to raise enough capital to allow the visionary CEO or senior manager to carry out his or her ambitious growth plans.
• The senior manager’s vision for how the business should grow conflicts with that of the business founder, and they cannot find a way to align their goals.

Conclusion

The idea that one might coax an already-motivated individual to work harder simply by offering more money or extra perks is misguided.

While certain benefits have become more important as motivators in recent years, focusing unduly on monetary compensation or status-laden perks for a talented self-starter may draw substantial emphasis away from the genuine factors likely to keep him or her excited about the job.

Small and mid-size companies will succeed in attracting and retaining talented, hard-driving, visionary senior managers if they can provide an exciting business model and the opportunity for those managers to grow the enterprise, fueled and guided by their own aspirations, creativity and desire to achieve.

Candace Walters is president and CEO of HR Works, Inc., an HR management outsourcing and consulting firm serving more than 600 clients in the Rochester, Buffalo, Syracuse and Baltimore/Washington areas. HR Works provides HR Department outsourcing, part-time and interim HR managers, affirmative action plans, HR*Stars recruitment services, legally reviewed employee handbooks and supervisor manuals, compensation programs, training and more. To offer comments, write walters@hrworks-inc.com

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