Research has shown that paying people more money doesn’t improve their performance. Here’s what does.
One of the biggest problems I’ve noticed while working with third sector organisations, is the turnover rate of lower and middle-level managers. In almost every charity I’ve worked with, I’ve seen some of the most talented and vibrant people leave, and it’s not because of pay, it’s out of sheer frustration.
Scores of research experiments over the years have shown beyond doubt that good pay can help you attract good people, but it doesn’t help you to retain them, nor does it motivate them to perform at the best of their ability. Instead, that same research has shown that there are five factors that make all the difference. They are: purpose, autonomy, personal growth, peer group and recognition. If you’re struggling to retain and develop great people throughout your organisation, ask yourself how well you score on each of these five areas.
Purpose: Doing something that’s genuinely meaningful fosters a deep and lasting commitment to any organisation. Charities should score ten out of ten on this measure, but often they don’t. The day-to-day challenges and politics can make the mission feel distant for anyone not regularly on the front line of services. Are all of your people actively engaged with your mission?
Autonomy: I’ve lost count of the number of times I’ve heard “that’s not my job”, “I don’t have the authority to do that” and “this is what I’ve been told to do”. Guidelines are important, but talented people will leave your organisation if they can see problems that they aren’t allowed to fix. Do your people feel empowered to challenge the system and break the rules to make things better?
Personal Growth: I’ve had three amazing bosses in my career. Each of them saw something in me that I’d never seen, and pushed and challenged me, to be more than I’d ever thought I could be. Those periods of extraordinary personal growth live with me now, and there’s nothing I wouldn’t do for those people if they asked. How many of your people feel that way about you?
Peer group: People don’t leave organisations, they leave people, and one of the biggest factors is a sense of unfairness or injustice. If they can see that their peers or their boss simply aren’t up to the job, and nothing is being done about it, their morale and performance will quickly drop, and the best ones will quit in short order. How much esteem do your people really have for each other?
Recognition: Researcher Dan Ariely once gave three groups of volunteers a sheet of paper with random letters on, and for a small sum of money, asked them to highlight where the same letter appeared consecutively. Each time they completed the task, they were offered slightly less to do it again. For the first group the assessor looked at the page, said “aha”, and put it on a pile. For the second, he didn’t look at the page, but just put it on the pile. For the third group, without looking at it, he put the page straight into a shredder. The first group continued until they earned around half the initial amount. The other two groups stopped very quickly, almost at the same time. The study showed that people will work, quite literally, for half the pay, as long as their work is acknowledged.
I’ve yet to see a single charity that couldn’t improve its performance and talent retention by paying more attention to those five things. Talk to your people as often as you can about your aims, and their role in achieving them; get them out meeting the people you serve and seeing the difference you make; help them decide what they need to achieve, and give them permission to do whatever they need to do; stretch them with new challenges and teach them new skills; fire poor performers quickly, so you can give good people the room to shine; and when they do, make sure they can see that you’ve noticed. It’s not rocket science, and it won’t cost you a penny.