Engaged employees make good companies great. Research shows that organizations with high levels of employee engagement outperform their counterparts by as much as 202 percent. People are the differentiator; they are the competitive advantage. So, how do we keep our top people engaged?

Money is the most obvious way to reward and motivate your employees; but, after a certain point, it stops being effective. Once people make “enough” money, income no longer pushes them to perform outstandingly.

This is not a new concept. Frederick Herzberg wrote the bestselling “One More Time, How Do You Motivate Employees,” in the 1960s. In it, he develops the Motivator/Hygiene model, a sort of employee engagement Hierarchy of Needs. On the left side of the column are the Hygiene Factors:

  • Do I make enough money?
  • Is my work environment safe?
  • Are there company policies and procedures in place?
  • Am I properly supervised?

Keep in mind that “enough money” will be different for everyone, depending on their lifestyle, goals and material needs. On the right side of Herzberg’s model are the factors that motivate us:

  • Do I feel a sense of achievement?
  • Am I recognized for my work?
  • Do I enjoy my work?
  • Am I given responsibility to lead or to extend the scope of my work?
  • Can I grow and advance here?

Both sides of the model are essential. If a business does not meet these hygiene needs, everything else is irrelevant. An employer can praise a worker all day long, put him charge of projects and send him away for training. But if the employer doesn’t pay enough, provide a safe place to work, and establish a functional business infrastructure, then the staff will not stay. The employer must have those basics in place before other motivators are effective.

Notice, again, that money doesn’t show up in the Motivator column. Bonuses, commissions, vacations, and other perks are irrelevant, because ultimately they don’t help us to do good work. They relate to our leisure time, not the outputs of our work effort. Once you have “enough” money it ceases to inspire.

Offer Meaningful Incentives

In “The Puzzle of Motivation,” Dan Pink makes the case that incentivizing work actually does more harm than good.

“Rewards by their very nature, narrow our focus, concentrate the mind. That’s why they work in so many cases, and so, for tasks [that require] narrow focus where you just see the goal right there, zoom straight ahead to it, they work really well.” For the complex tasks that we’re responsible for in our work, though, “the reward actually narrows our focus and restricts our possibilities.”

The question is: “How do you inspire your people to motivate themselves?” If money is not the answer, what is? A McKinsey study found that non-monetary motivators – leadership attention, praise from immediate supervisors, and the chance to lead projects or task forces – were as or more effective than monetary incentives – cash, increased pay, and stock or stock options. (Hey! Hertzberg figured that out in 1960s!)

Ultimately, as human beings, we want to make a contribution, to do something that helps or furthers something greater than ourselves. It might seem odd, for instance, that the chance to lead a project is so much more meaningful than getting a bonus. But if I say to you, “I’d like you to lead the team on this project. It is an important one, and you’re the right person for the job. Your good work doesn’t go unnoticed.” Here is more responsibility, more work, and perhaps a bit more stress – but it taps into our need to contribute.

As leaders, we can inspire our people by recognizing them, making time for one-on-ones, seeing their achievements, giving them responsibility and the opportunity to contribute. The motivation doesn’t come from us: it comes from them. We create an inspirational environment so, after hygiene needs are provided, employees are self-motivated to succeed – and to help the business succeed.