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Even Golden Handcuffs Are Shackles

Restricted stock units keep employees from quitting but it's foolish to mistake that for loyalty, much less motivation.
Even Golden Handcuffs Are Shackles
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Most forms of financial incentives are secondary motivations for employees. In the panoply of human motivation, financial concerns rarely rank at the top of the list. Employees in hot industries know that other employers will compete for their talents, and bribery is the first tactic. Here in Silicon Valley, hurling large sums of cash at new recruits has become the norm.

Yet these financial incentives never buy loyalty. They never create employees who stay with a company and strive to do great work. Micrel, the semiconductor company I founded and led for 37 years, had the lowest turnover rate in our industry. We managed to do better than our competitors by paying attention to deep human motivations rather than the transient nature of money.

Motivations

Economists go to great lengths to study both the rational and irrational aspects of motivation in commerce. What they rarely investigate are the more enduring aspects that humanity plays in motivations. For employees, this is vastly more important than financial decision making. An employee who spends 250 days a year with his employer, who spends more time at the office than with his or her own children on any week day, is investing most of their human experience with that employer. If the employer sees golden handcuffs as an incentive, then they communicate to that employee a very base relationship that fails to connect with a human experience.

Despite money being a large lever in our hyper-competitive Silicon Valley culture, many companies realize something more must be provided to prospective employees. Google offers the chance to help engineer global change. Apple brings employees into a realm of technical elegance. Facebook thrives on the art of interconnecting real people. These are good starts, yet they still miss the essence of humanistic employment.

Within each soul are aspects of how they relate to the world, and mainly to other people. Everyone needs to have a sense of value -- that they contribute something of worth. They need to feel appreciated and wanted. They need to feel safe. When one looks at Maslow’s Hierarchy of Needs, these factors dot that pyramid. Money does not.

This is why golden handcuffs rust. They are not humanistic, but restrictive. They are designed to command obedience, not participation. Golden handcuffs imprison people, not elevate them. They ignore what lies at the center of the human heart (and for more on the human aspect of management, turn to Tough Things First).

Creating a place people want to be

In open societies, people have a choice as to where they work. Creating a place where they want to work is the key to keeping them on the payroll. Such workplaces are built around human motivations that existed long before currency. What makes a wonderful workplace is similar to what makes a wonderful home. The interwoven aspects of security, affection and interrelated lives drive both.

Usefulness: Assure that every employee not only has a truly useful role, but that they understand it is of value. Drones doing mindless, repetitive tasks rarely feel valued. Even your janitor provides value, and they should know it as well as your chief technology officer.

Feedback: Believing that one has value is made so much more likely when they hear others professing it. Regular praise, such a simple process, does more to keep a good employee motivated than a holiday bonus check.

Security: No job is perfectly safe, but no employee stays in an environment where they constantly worry about job security. A track record of few or no layoffs paired with transparency about the industry, competitors and markets ameliorates many concerns. And when layoffs become absolutely necessary, ensure employees completely understand the rationales and realities, so they know it was beyond management’s control and not due to any lack of value by the employees.

Culture: The corporate culture should make employees feel safe. This includes being treated with respect and dignity, reducing conflict, improving cooperation and collaboration, and even going as far as enforcing civility (at Micrel I banned swearing, much to the consternation of the rough and rowdy semiconductor sales teams of the late twentieth century).

Related: Cut Any Expense You Want But Don't Dare Take the Coffee Away!

Transparency

Part of a safe environment is one where people know what is going on (and this explains much about America’s current political angst). Transparency in all matters not only gives employees a feeling of belonging and safety, it better enables them to make the millions of small daily decisions necessary to run a profitable company. Micrel was profitable for 36 of its 37 years on a GAAP basis, which speaks well about the decisions our employees routinely made.

Eliminating the castle tower is a good start. The C-suite should never be a fortress. Instead, management’s key job is to communicate -- openly and transparently -- about all matters, from changing market realities to internal operations. Any time management keeps a secret, it will be perceived by one employee or another. Secrecy breeds suspicion, and that destroys a healthy, humanistic environment. To this end, regular meetings at all levels, and corporate-wide meetings that transcend hierarchy are necessary.

One of the most transparent acts is profit sharing. Unlike golden handcuffs that confine a person with real motivation, profit sharing connects being part of a corporate family to individual contribution. It is a visible commitment to making each employee’s value perfectly clear.

Related: Let's Be Real: Why Transparency in Business Should Be the Norm

Clear vision

People are not lemmings. They do not follow confused leaders. Basic instincts keep people from entering dark rooms. The unknown and the invisible ignite ancient danger signals. The same goes for employees and the companies they work for. When management fails to have a clear vision, or to communicate that vision, employees feel like they are wandering around in a dark room.

It doesn’t require personal charisma from the CEO to make a vision and a plan clear to all employees. It does take commitment to communicating in order to add this layer of inviolability, and to make every employee feel empowered to use the value they provide.

Related: It's Your Vision: Help Them See It

Free, yet united

Employees are not chattel. Handcuffing them goes against their basic humanity. Enduring companies never use golden handcuffs for long, and when they do, the effects on employee loyalty are minimal.

Great companies understand people are free agents, who can leave at any time. Confining them is impossible, and financial confinement is nearly useless. But making each employee valuable, safe and engaged will keep them onboard for as long as you want them to be.

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