by Charalambos Vlachoutsicos

While people expect fair pay for their services, we all know that money isn’t king. Nevertheless, when it comes to business we all too often act as if it were. We think purely in terms of salaries, bonuses, and people’s positions on the org chart. While we pay lip-service to the idea that people may have non-financial motivation for their work — acknowledgement, appreciation, pride in accomplishment, enjoyment and so forth — we spend all our time working out how to incentivize our workforce with financial rewards.

What an awful way to think about people! Yes, money and status matter, but it can be inhibiting soul-destroying and morally corrupting for managers when companies place too much emphasis on them At some point, after all, doesn’t exaggerated pay feel like a bribe?

In my experience by far the best way to motivate your employees is to find ways that they can take pride in their skills and their knowledge. When you do this, you very quickly discover that people stop being passive followers and start to share their insights and ideas. Instead of being loyal to their pay checks they become loyal to the company.

To illustrate, let me share something I witnessed as consultant to a western private equity investment firm on their investment in a sawmill located in a small, secluded town in Northern Russia.

One of the problems the German manager of the mill faced was integrating some disaffected employees, whom according to deeply ingrained local practice he could not fire. Ivan was the worst of the troublemakers. His heavy drinking on the job and bad temper constantly created problems for his foreman and fellow workers.

The mill was in the process of installing a new slicing machine that would vastly improve productivity and quality. One of the management routines I had introduced was a daily brief “brainstorm” meeting between management and the Austrian technician sent by the supplier to help install the machine.

Unfortunately the workers lacked the technical know how required to communicate and work effectively with the Austrian technician. Furthermore, there were scarcely any qualified technicians in this remote place. As we were discussing the problem, the secretary who was taking notes said, “Believe it or not, the only one that understands a great deal about technical matters is Ivan”.

So I met with Ivan early the following morning before he had drunk too much and could still function. I looked him straight in the eyes and said “Ivan, the company needs you for a complicated and important task that only you in this factory can perform successfully” and proceeded to explain the work he would do with the Austrian technician and the bonus he would receive upon successful installation.

He pondered for a second and said: “Will do”. His behavior from then on changed completely. No drinking, no fighting, no trouble. Instead he cooperated seriously and effectively with the Austrian who was enchanted by his intelligence and technical skills. Not only was the machine installed in record time but Ivan’s qualities inspired the German Manager to appoint him as Technical Director of the mill.

Ivan didn’t need to do this. He was reasonably well paid and his job was secure. What made the difference was that we had given him an opportunity to be proud of himself by allowing him to put his expertise and skills to good use. It’s precisely this kind of intervention that managers are supposed to be there to do.

So when you’re thinking about ways to motivate your work force, always acknowledge and praise their worthwhile contributions and try to find out more about their interests, their backgrounds, their skills. These will give you insight into their non-financial, intrinsic motivations, which, as Ivan’s transformation illustrates, can be far more powerful levers than money.