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The Wealthy Franchisee

Here's What Really Motivates Employees. (Hint: It's Not Money.) Giving employees more money doesn't necessarily motivate them in the way you think it would. Human motivation is complicated.

By Scott Greenberg Edited by Dan Bova

Key Takeaways

  • Employees may become more sales-driven rather than service-oriented, which is detrimental to building long-term customer relationships.
  • Simply increasing salaries does not necessarily lead to sustained improvement in performance.
  • Intrinsic motivation for your employees is like great service for your customers.

Opinions expressed by Entrepreneur contributors are their own.

This is part 4 / 4 of The Wealthy Franchisee: Section 4: Hiring and Managing Your Team series.

"OK, guys, who'd like to make some more money?" My team at the Edible Arrangements that I owned whooped with excitement. We were having an after-hours company meeting, and I was introducing a new contest to boost our ticket average. I devised a two-week bonus program based on sales. The more they sold, the higher the prize. I also offered financial incentives for selling our new $500 fruit arrangement.

The plan worked — for a while. Team members ran to answer phones, engaged customers, and suggested upgrades to their orders. Sales increased, and many employees earned bonuses, so I decided to extend the program.

After a while, their enthusiasm petered out. Employees talked less about their sales, and the ticket average went back to normal, even with the same bonuses still available.

My thinking was flawed in two ways. First, incentivizing my team to boost the ticket average made them predatory. Their focus was on selling rather than serving. That's shortsighted. Our customers are our family, not our prey. I wanted long-term relationships with them, and that would only happen if we provided the best possible experience. Eventually, I realized that, and we discovered that we enjoyed serving more than selling. It became our way of doing things, and it lasted. Interestingly, that's when we built the highest sales. Employees also seemed more grateful to receive $10 Starbucks gift cards for good online reviews than $50 cash bonuses for high sales.

The second mistake was my belief that more money meant more motivation. It didn't, not after the initial burst of activity. The continued opportunity to earn bonuses had no lasting effect. On other occasions, I tried reengaging complacent team members by giving them raises. They were appreciative of the extra money, but their performance didn't improve.

Giving employees more money doesn't necessarily motivate them the way you think it would. Human motivation is complicated. There's more to it than rewards and consequences.

Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.

Extrinsic vs. Intrinsic Motivation

Our behavior is driven by two types of motivation. Extrinsic motivation describes the use of external incentives to drive performance: compensation, prizes, rewards, or promotion. Generally, it's provided by an authority figure such as a boss, parent, teacher, etc. It's all the rewards we're offered to behave a certain way. This form of motivation works to stimulate short-term bursts of activity: "If you eat your vegetables, you can have some ice cream." External motivators require someone else's input.

Intrinsic motivation comes from within. It's an internal, emotionally satisfying payoff. It's when we do something just because it feels rewarding. Think of all the things you do just because they're fun or fulfilling, such as hobbies. You don't need outside stimulation. You do them all on your own because you want to.

People who thrive most in pay-for-performance jobs such as commissioned sales or driving rideshare derive more from their work than financial gain. For them, money is also a satisfying measurement of progress, a way of keeping score. Yes, that Uber driver wants the extra $150 for completing a certain number of rides. But there's also an internal payoff in the sense of fulfillment that comes from achieving a goal. The reward is as emotionally satisfying as it is financially beneficial. That pushes people to work harder.

After big holidays, many Edible Arrangements franchisees would take pride not just in their sales, but also in how many orders they filled or in how they ranked. Those numbers have nothing to do with profit. Still, they were meaningful statistics to many people. They liked the achievement itself. That was also true for my employees — they always asked how many fruit baskets they had produced and how we did compared to other locations. The answers had no effect on their paychecks, but it really mattered to them. It motivated them to give holidays everything they had.

That's intrinsic motivation, and that's what you want. You promote it by creating an environment that taps into what your employees want.

Related: A Little Gratitude Goes a Long Way. Do These 5 Small Gestures To Make Your Employees Feel Appreciated.

Promoting Intrinsic Motivation

Intrinsic motivation for your employees is like great service for your customers. It's about creating an experience that appeals to the things they care about most. Remember, we humans are driven most by pathos or emotion. Anything that makes us feel good is intrinsically attractive. The key, then, is to create a work environment that aligns with what your team cares about most. Employees show up for the financial payoff, but they step up for the emotional payoff.

The problem is that many franchisees make assumptions about what drives their employees, and often they think it's just money. I once surveyed the employees of a restaurant group that was underperforming. The general manager complained to me that he wasn't allotted enough funds to pay them well. I asked the employees in a survey to rank what they wanted most from their job. Out of 12 items, salary came in at number four. What they wanted most (statistically by far) was to feel appreciated for their effort. Many told me in interviews that management provided little positive reinforcement. I told the GM that instead of throwing money at them, he needed to pat them on the back. Don't just pay them; praise them. It's what they really want. And it's cheaper.

I've done these surveys many times and gotten similar results. I even did it with my own employees. I figured that if I could identify what mattered most to them and appeal to those values, it'd be easier to motivate them. Take a look at how ten of them answered the question in this chart:

Related: 5 Ways to Create A Win-Win Culture Throughout Your Supply Chain

Of the seven options, only three were chosen: pleasant work environment, growth within the company, and for one team member, personal growth and learning. (A tenth person responded in the comments, echoing similar feelings as the others.) That led to more conversations about what these things meant to them. What did they like about our work environment, and what would make it even better?

What new positions, job titles, and opportunities could we create so team members felt like they were progressing? What things beyond their operational responsibilities would they like to learn about? It didn't take long to identify what they wanted, and it didn't cost much to provide it.

We did for our team what we did for customers — identified what was most important to them and did our best to provide it. Our employees loved that we made the effort. Honestly, they loved that we even asked them in the first place. It created an "Me-You" relationship that made all the difference. Their performance was fine before. Now it got even better, without us having to constantly be on them.

Mr. Rooter Plumbing's top franchisee, Vinnie Sposari, is also big on creating an intrinsically satisfying environment. He's got a team of 65 people, many out in the field, and he needs them to operate independently. "I don't micromanage. I give them ownership in the work they do. They appreciate that, and they take their work personally. They feel a great sense of pride in being number one in sales," he said.

So how do you promote that sense of "ownership"? "Find the right people who are energized by the work you're doing," he said. "Then you have to be there for them. Make them feel cared about. Help them grow. That connects them to the company culture and makes them feel proud of their contributions." Promoting his team's independence has done more than build the top sales in his franchise system. It also saves him time and enhances his quality of life. While his franchise continues to run, he's now able to leave the state with his wife to spend winters in Palm Springs.

There are reasons to pay people well. Higher salaries attract more applicants, increasing the pool from which you get to choose. Higher salaries, when combined with a good work environment, also encourage people to stick around when they have other options. Good compensation attracts and keeps great people, although it doesn't create great people. But trying to motivate mediocre employees to do better by paying them more simply doesn't work. Sustained great performance only comes when employees are intrinsically motivated. Make this a top priority. As an employer, think of yourself as a farmer. It's not enough to acquire good seeds. You need to plant and cultivate them. If you tend to your crop, you're likely to harvest more wealth.

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