The $US188 billion retailer Wal-Mart's latest strategy to build a smarter workforce is to offer its employees affordable online college degrees. If a staffer's performance evaluation is good and they have been with the company full-time for a year, or three years part-time, they are eligible.

Wal-Mart plans to invest $US50 million over the next three years to provide tuition assistance and other tools to help staff prepare for college-level work and complete their degrees through American Public University. Staff earn credits towards their degree from their day job with Wal-Mart (even cashiers and truck drivers) and are eligible for a 15 per cent discount on tuition.

Significant financial help for higher education for staff is unlikely to be a realistic retention strategy for most businesses (although Sydney Water offers two scholarships for the children of staff each year.) But there is strong evidence that it does not take deep pockets to keep staff happy and retention levels high.

For any boss who thinks that the almighty dollar is the only way to motivate and retain staff, they should take the time to watch author and workplace guru Dan Pink's ingenious talk he gave to the Royal Society for the Encouragement of the Arts, Manufactures and Commerce on his book Drive: The Surprising Truth About What Motivates Us. The animated piece The Surprising Truth of What Motivates Us has become a YouTube hit since it went live in April 2010.

Pink refers to major research by MIT, Carnegie Mellon and the University of Chicago on US workforces. The studies were funded by the Federal Reserve Bank. The experiments were designed to measure productivity in workers offered a variety of cash bonuses for work effort, based on typical cash bonus schemes in organisations. They tested staff doing repetitive, mechanical work and work that requires cognitive skills.

The studies found that cash rewards work only for mechanical, repetitive work and that the carrot-and-stick approach to work that involves even rudimentary cognitive skills actually creates poorer performance. The researchers were so surprised they repeated the experiments in Madurai, India, and the same results came through. Money is a great motivator for rudimentary tasks. For anything that involves cognitive, conceptual thinking though – forget about it.

"Higher incentives lead to worse performance," says Pink.

Motivation 3.0

"The best way to use money as a motivator," says Pink, "is to pay people enough to get the issue money off the table so that they are not thinking about it at work."

That's when Pink's own formula for motivation, "Motivation 3.0", comes into play. The secret to staff motivation is three ingredients: autonomy, mastery and purpose. Without these ingredients, staff are likely to feel like "a bunch of horses", says Pink.

Dr Adam Fraser's consultancy specialises in staff performance and he regularly speaks to organisations about staff retention and engagement strategies.

"Small business really wants to know how to manage performance," he says.

"I find that so many owners spend all their time on stuff that doesn't really matter, small, unimportant but urgent things and not enough on strategy," he says.

According to Fraser, a key barrier to staff engagement is the "pale, male and stale" manager.

"For these baby boomer blokes, the thought of saying thank you to staff, of sitting down with a staff member and saying 'how are you going?' scares the hell out of them," he says.

"They think it is a bit fluffy. And if I ask them how they are going, they might say something emotional [cue horror movie soundtrack]."

SmartCompany
interviewed Fraser between sessions at a June 2010 conference for a consortium of Australian jewellers in Port Douglas. He was invited to discuss staff retention with CEOS and management in a sector that typically employs young, casual staff and suffers from high staff turnover and low engagement.

"Their approach to staff retention was all wrong," says Fraser.

"Their staff want more out of work but employers keep thinking, 'I pay your way so you should work hard'."

During his keynote, Fraser ran through Gallup Consulting's top 12 levers for engagement that includes statements such as 'I know what is expected of me at work' and 'At work, I have the opportunity to do what I do best every day'.

"The thing about engagement is that it is so simple," says Fraser. "Have staff been thanked in the last week? Has someone talked to me about my progress? Do I have a friend at work? Are the rest of my team engaged? Does my manager care about me as a person? None of it requires a Harvard strategy," he says.

Delegates at the conference admitted that they weren't going any of the engagement strategies. "If they keep running their businesses with that old-world mentality, people just aren't going to stick around," he says.

At top-tier law firm Allens Arthur Robinson, there are myriad opportunities for its 1,500 staff to extend themselves through pro bono work, career breaks and secondment work with indigenous communities organisations.

Last month, the entire Perth office of the firm left work early on a Friday afternoon and worked on community projects including animal refuge work and tree planting. However, staff engagement and retention are not all about strategies implemented by management and the HR department.

"The GFC has made us pull back on discretionary spending, but we still try and do things that add to the cultural fabric of the organisation," says Allens' director of people and development Susan Ferrier. She highlights the importance of staff having strong connections within the firm, with clients internally and externally. Running, cycling, soccer and netball clubs operate across the firm's national offices.

"Grass roots driven activities" such as footy tipping keeps connections strong. "They are randomly organised with emails flying around," she says.

"That's the way it should be."

"The organisation has a role to create a culture where people feel they can do that sort of stuff and don't have to ask permission to do it. We have a role to fund that stuff, provide uniforms but after that, it is up to the groups to self-manage." Says Ferrier: "People have to feel they have freedom and autonomy to do that sort of thing."

Top tips for staff engagement and retention

1. Stop thinking that money is the only motivator.


2. Give staff autonomy.

Allow staff to be self-directed. "If you want engagement, self-direction is better," says Pink.

Google's "20 per cent of time" project which allows employees to work on individual projects is an innovative incentive. Software company Atlassian offers a similar program, where staff have allotted time to work on their own projects. They come together regularly (with snacks and beer) to share ideas. 3M offers its staff similar freedoms.

The co-founder of fruit drink company Emma and Tom's Tom Griffith believes staff need to be self-motivated. "Strictly speaking, you can't motivate someone (ie. you can not grab them by the scruff of the neck and shout at them to get excited), but you can put them in an environment where they can motivate themselves," he says. "Emma and I believe buy-in is the best motivator, so we try to guide our team into making their own decisions, which they then own. We try to spend a lot of one-on-one time with our team, which we can do because we are a small company and then there is beer."

3. Allow mastery to flourish.

Allow staff the opportunities to improve. Improvement is satisfying. Some strategies include: detailed performance feedback, experience in a different role/department in the organisation, new assignments, sabbaticals, career development opportunities, training, secondments, conferences and time off for volunteer/pro bono work.

4. Present staff with a sense of purpose. Articulate a compelling vision for the business and set clear expectations.

Staff need to know their tasks, roles and functions in the business, in effect, why they come to work in the morning. These clear expectations are a critical factor in staff engagement according to Fraser.

"The majority of workers just don't have a clear expectation of what is needed from them," he says. "Staff should always be able to answer the question: 'What do you need to do in the next three months in your role and how will it impact on the business?'"

Beyond a specific role, understanding what makes the business tick and why coming to work makes a difference to the world also needs to be articulated. At Skype, it's about "making the world a smaller and better place". At Carmen's Kitchen they "believe food should come from the kitchen, not the chemist".

5. Offer recognition (and make it public).


It's obvious, but giving recognition to staff if something that many companies forget. Simple recognition schemes (ie. the old "employee of the month") are a great way of recognising star performers.

6. Get inventive about employee benefits.

Sydney Water offers two scholarships for children of staff members and staff get to choose where the $100,000 charitable donations go each year.

Google Australia offers staff health insurance and new parents take-away food for a month. While Ikea offers 26-weeks maternity leave for new parents including same-sex couples, which can be taken over 12 months. Four-weeks paternity leave is also offered.

Perks can be tied to the success of specific tasks. "Talk to the employee about what they have done really well, explore why it worked well and reinforce the right behaviour," says Pink.

"I've never known anyone to turn down a swanky dinner for two or a Gold Class cinema voucher."

Emily Ross is a Melbourne-based business writer, author and consultant.

This article first appeared on SmartCompany.com.au, Australia’s premier site for business advice, news, forums and blogs.

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