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Welcome to the new normal, where workers struggle to care about their jobs. What are the costs, causes and solutions to what may be the defining corporate crisis of today?
It’s Sunday night in Seattle, and Dina Vaccari’s fridge is stocked with colorful Mason jar salads, lined up and ready for a week of battle. Stacked up beside her bed are inspirational books by Buddhist monks on finding your most productive self. Her clothes dryer is humming, fluffing the towels for her morning swim workout. You’d have a hard time calling Vaccari unmotivated.
The 34-year-old MBA grad lives and breathes motivation, journaling about career goals and attending lectures on fine-tuning business skills. And yet, when it came to her professional life, Vaccari sometimes had trouble finding motivation. “I felt like I was working at a breakneck pace.” Worse, she says that since her effort was already maxed out, she couldn’t imagine how she could possibly move up within the company without completely exhausting herself. “It left me feeling apathetic,” she says.
That wasn’t how she pictured things going. Raised the child of a hardworking Italian father in Pittsburgh, Vaccari always envisioned that her MBA would lead to a secure future, one featuring a rising paycheck, a reliable health plan and a fat 401(k) fund waiting at the end of the line, made all the larger by both a strong stock market and years of corporate matches.
But instead of building the steady career of her parents’ generation and feeling loyalty to one company, she spent her years after grad school job-hopping, leaving one position because of that breakneck pace, another because of the lack of any work-life balance and another because she felt as if she was simply “attending meetings about making presentations” without making a difference for the company’s bottom line. She decided to take a break; she got married, she traveled and she started to wonder if she would ever encounter a work atmosphere where she brought unique value to a team and was strongly backed by an enthused manager.
In short, this overachieving MBA grad was stressed that she would have to settle for simply bringing home a paycheck, instead of thriving in an environment where she was “moving the needle for business.”
It may sound like a gimmick to ask: “What’s my motivation?” You might remember the old Sprite commercial that mocked even pondering such a question. But this curious search for motivation has become a very real, and very significant, problem for some of today’s top workers, and in turn, for today’s top companies.
As many of us know, much of the workplace has transitioned over the past 50 years away from a paternalistic, caretaker economy and toward an on-your-own, gig economy. Gone are the days of single careers with one firm, replaced by a workplace setting where even top employees are threatened by contract workers, and where benefits are shrinking or evaporating entirely. The trend, both in the old corporate coddling and in the new disenfranchising, is often associated with the United States. But in fact, global competition is threatening to change the relationship between workers and companies worldwide.
Sidebar: To have, to have not > Read more
By itself, the workplace shift created what many experts believe was the first blow to motivation: Employee loyalty dropped as every corporation pulled back on benefits. The second blow? The economy. What had kept many people going strong—and striving for advancement—fell off the cliff when everything from housing booms to stock market windfalls collapsed into pieces. Now, with interest rates low for so long and competition stiff, many industries and markets have hit a wall for the foreseeable future. Take away all those booms, and paychecks simply don’t hold the same promise that they used to.
To be sure, these twin developments can have a reverse effect, pushing the fearful to work hard to stay employed. Necessity can be a form of motivation. But companies know full well that carrots can engage workers better, especially if employers want employees who are more than out-the-door-at-5 kind of team members. Only, where are the carrots? “People have become really disaffected with their jobs and the organizations they are working with,” says Teresa Amabile, professor and director of research at Harvard Business School. She is the co-author of the groundbreaking book, “The Progress Principle,” which surveyed more than 200 companies and 12,000 employees on worker engagement. What did she find? At more than eight out of 10 companies, workers did not feel as if they were making progress, which in turn creates a motivation problem. “When employees have setbacks instead of progress, they are less happy and less intrinsically motivated,” she says. “They will be less creative in their work, less productive and demonstrate a lower level of commitment.”
All of that can have what can only be described as a mind-blowing cost to the bottom line. Corporations pour enormous resources into fostering superior performances from their staffs, a goal that has become important in today’s ruthless global economy. By one estimate, actively disengaged employees are costing U.S. firms $450 billion to $550 billion in lost productivity per year. Taking the issue from the opposite angle, Korn Ferry found that firms that engage and enable their employees post up to 4.5 times more revenue growth than companies that don’t. “The importance of all this just can’t be understated,” says Mark Royal, senior principal at Korn Ferry Hay Group. “It’s what’s going to separate the good companies from the truly great ones.”
Despite how important employee motivation is to corporations and, in turn, the economy, historical comparisons are rare. The most well-known social science survey in the U.S., conducted by the National Opinion Research Center, offers conflicting clues. It finds that, dating back to 1973, workers generally give job satisfaction high marks. But ask people how they feel about their own accomplishment or advancement in their jobs, and the charts are heading slowly but steadily in the wrong direction.
That’s why experts like Amabile have gotten more specific about how they talk about and help others digest the concept of motivation. In fact, they’ve split motivation into two more manageable and measurable elements: intrinsic motivation and extrinsic motivation. In short, extrinsic motivation is a drive that comes from outside rewards or punishments; it’s what propels you to put in the extra hours so you can be eligible for a bonus, or so that you don’t have to get an angry 2 a.m. email from your boss. Intrinsic motivation on the other hand is a drive that comes from within; it’s the adrenaline rush you get from a challenge, or the satisfaction you get from nailing a presentation.
The data show why distinguishing these forms of motivation matters. According to a Korn Ferry survey, only 59 percent of global employees feel extrinsically motivated to work hard and give their best effort. In other words, more than 40 percent of workers don’t feel as if their company is offering the kinds of incentives that will keep them motivated. And though the numbers on intrinsic motivation might look better (70 percent of global employees feel intrinsically motivated at work to do and deliver more), Royal points out that even that big percentage reveals a major motivation gap. “When you consider that a third of employees are not engaged,” he notes, “that’s a lot of time wasted for both those employees and their employers who are not getting the full impact of their potential.” He calls this wasted potential a looming “energy crisis” for companies around the world.
It’s a crisis that Bob McGrath never had to deal with. McGrath is an IBMer, a former sales manager for IBM who retired after a 16-year career with the company in the ’60s and ’70s. Today McGrath runs the IBM Alumni network, an informal data bank to help IBM employees of a bygone era connect in the digital age. He knows better than anyone how good employees used to have it. “We had good benefits, like free life insurance, and we even had country club memberships if you lived near an IBM plant. If you flew over a certain number of hours, you flew first class …” The list goes on for McGrath. He says that the benefits were great, but they were enhanced by the fact that “back then, IBM did not lay off anybody.” He remembers that there was “very little competition at the time,” and that today’s typical business concerns, such as worries about a company’s cash flow or balance sheet or even whether the company will exist tomorrow, simply didn’t come up when you worked for IBM back then.
As a result of this warm work environment, McGrath says he was fully motivated. “Absolutely, I felt loyalty to the company. They paid me and I gave them the best I could.” He says that a mix of internal and external drivers motivated him: “IBM put a lot of money into an individual employee,” he says, adding that at the same time, “self-pride was driving me to do my best.” Even after retiring from the company, he still looks back positively on his experience. “I still respect the company, and I still think it is one of the finest that exists.”
But employees today might not come away with the same dazzling praise for their employer, and the global economy has a lot to do with that. Companies have had to change gears since the days when McGrath was employed, and as a result, their relationship with their employees had to change as well. First came the deregulation of the 1970s, and with it a massive tidal wave that shook the foundation of big companies across American industries, from airlines to shipping companies to telecommunications firms. Budgets started to shrink, and soon the largess that defined McGrath’s IBM era was a thing of the past. Just one sign of the change reveals itself when you look at pensions over the years; a recent study found that from 1998 to 2013, the number of Fortune 500 companies offering traditional defined-benefit plans dropped 86 percent, from 251 companies to just 34.
Many businesses, of course, have replaced pensions with the 401(k) as a form of retirement planning. But for a remarkable number of workers today, that kind of benefit still remains out of reach. The reason: the rise in contingent or contract labor, a popular method for companies to save costs. Estimates vary on their size, but, echoing some government data, the supply management firm Ardent Partners found that by 2014, nearly 35 percent of the average company’s work force was contingent or contract-based; by 2017, they predict that number will grow to 45 percent. With nearly half of the work force slated to become contingent by next year, it’s easy to see how loyalty becomes even tougher for employees to feel—or for companies to achieve—these days.
Edwin Locke is a pioneer in the study of motivation; his 1968 study on goal-setting has structured the conversation around workplace motivation since then. As he sees it, companies have had no choice but to make moves that sap the very level of employee engagement they need. “Not many companies can afford the benefit packages they used to give because today everything is so tight,” he says.
Of all groups, millennials were the first to recognize and adapt to this corporate reality. Though much criticized as slackers and unengaged workers, experts say they merely realized that staying loyal to one company might be less of a positive and more of a liability. Millennials change jobs frequently, and Locke notes that they “know the rapidity with which technology and the business world changes,” and as a result they job hop “to develop a repertoire of skills so they can be ready for the next dramatic change.” Rather than pushing for those skills within the umbrella of one company that they then remain loyal to their whole career, these workers are on the move, and they’ve got little patience for organizational inefficiencies or barriers to getting things done. If a company starts to frustrate them, they’re gone, often before management even realizes there’s a problem and looks up, shocked to see a swinging door.
So what can companies do to navigate these new tough times and keep their employees motivated? Keeping up with a changing global economy might demand that companies adapt their engagement approaches, their reward strategies or even their organizational design. But more than anything, the solution might lie in creating a change in the work climate itself.
For some, that change begins at the top. Meet Kurt Graves, who became the CEO of Intarcia Therapeutics, a Boston-based start-up, after several high-level stints at large outfits like Novartis and Merck. He says that over his career, he’s seen companies get tripped up by their own managers, who drive down employee motivation. “There are a lot of mediocre companies with a lot of people who are stuck and lost because their leadership is stuck and lost.” Harvard professor Amabile couldn’t agree more. She points out how her study found only one in seven companies “where the managers paid sufficient attention to whether people in the trenches had what they needed.”
On the other hand, she notes, one company was experiencing a “positive spiral,” where employee motivation led to progress that led in turn to benefits for the company. The secret: managers who were paying attention to giving people clear goals, sufficient autonomy, adequate resources and both help and time when they needed it. In short, she says, the managers were doing “very ordinary things you would think any manager should know they should do.”
Graves adds that creating a sense of purpose can help drive employee motivation as well. “Once you can get everyone connected to a purpose in your business and everyone is behind it, then that is the most powerful thing you can do.” He adds, “That, I think, is the secret sauce.”
And the secret is starting to get out. Today, more and more companies are using social responsibility programs to help foster a sense of meaning, and thereby motivation, in their employees. Much of this is driving what’s known as the work-for-purpose movement. According to the social responsibility movement, companies need not make the zero-sum decision of whether to turn a profit or increase the welfare of society; increasingly, companies are trying to do both. And it turns out that this commitment to social responsibility is turning into a new driver of employee motivation. Certainly, consumers agree: Studies repeatedly show a rising public desire for companies to make money and support good causes at the same time. But the trick to getting the most out of the work-for-purpose movement, and in turn, out of employees’ motivation, might be in getting management involved. According to a study by the marketing firm Edelman, 55 percent of global consumers believe that CEOs themselves should be the ones publicly making a long-term commitment to addressing societal issues. Allowing their employees to get invested in that vision might in turn be the key to restoring employee motivation.
Dina Vaccari agrees. Vaccari, the highly motivated yet untapped MBA, says she was looking for a job where what she did would “improve people’s lives in some small way.” She eventually landed what she feels is a very promising gig as a product manager at a major corporation.
“The benefits are there, sure,” she says, adding that she is relieved her partner will now benefit from her employer’s health plan as well. But Vaccari is also excited by the fact that she can see how her new position will allow her to work toward making things better for the end user. “I’m now empowered to do what I do best; I’m empowered to shine.”