Motivating... on a Budget

Motivating employees on a budget is a key challenge for the Not For Profit sector in Australia. Wage growth is at the lowest level since the Australian Bureau of Statistics started recording data in 1998, with the Wage Price Index currently sitting around 2%. In addition, State, Territory and Federal governments are seeking to reduce expenditure, leading to funding constraints within the sector. With wage growth barely keeping up with consumer price increases, there is a risk that employees are feeling short changed. They’re simply not seeing the salary increases that were available as recently as 2012 when the Wage Price Index was around 4%.

Given that context, here are five ways you can motivate your employees on a limited budget.

1. Develop a reward strategy
A reward strategy does not need to be complex. At the core of an effective reward strategy are the answers to two questions: “What do we reward?” and “How do we reward?”. Most Boards and CEOs haven't consciously considered what they reward within their organisation. Rather, an informal approach to reward is developed over time. The easiest way to identify what we reward is to look at the organisation’s policies and practices around pay. In many cases organisations primarily reward tenure - the longer you stay with an organisation, the more you get paid. While this is not necessarily a bad thing, it’s also worth considering whether you’d like to reward the performance, capability and contribution of individual employees.  Having a discussion about what we want to reward is a helpful way to ensure your leaders and managers on the same page. This might include agreeing what outstanding performance looks like, and deciding how this should be rewarded.

2. Review and benchmark remuneration
An important step in making the most of a limited salary budget is to examine the internal consistency and external competitiveness of pay. Internal consistency looks at roles of similar responsibility and complexity to determine how consistently people are rewarded. Salary surveys provide an opportunity to understand how we pay compared to the broader salary market. This provides helpful context for determining any changes that might be required to keep pace with the market within funding constraints.

3. Build clarity and a feedback culture
People are motivated by a sense of purpose. We long to be a part of something bigger than ourselves, and to understand how our roles contribute to that broader vision. Goal setting and performance feedback provide a great way of understanding how we are contributing to the success of the organisation. Cloud-based performance management software such as PeopleGoal ( provides a fantastic way to build clarity and a feedback culture by allowing people to link their goals to those of the organisation, gather feedback from various sources and capture the outcomes of performance conversations. Employees can also use the system to recognise each other informally through social recognition. The relatively cheap per-user pricing of such software helps make it accessible to many organisations that would have found traditional performance management systems to be out of their reach. 

4. Leadership team recognition
Recognition from a leadership team can have a large impact on employee motivation, especially when the reward is unexpected. It can be a very effective way to recognise your most outstanding employees. If you set aside just 0.5% of the salary budget to recognise 10% of staff, it equates to a 5% opportunity for the individual. The leadership team can then decide on a monthly or quarterly basis who the outstanding performers are, and what level of recognition they should receive. The outcome might be a payment, funding conference attendance, or something different altogether.

5. Manager recognition
Managers have a significant impact on how it feels to work for an organisation. We can help equip managers by providing them with a modest budget for ad hoc recognition of their employees. This could include vouchers, experiences or gifts. While these are typically liable to Fringe Benefits Tax and require some guidance as to appropriate use, a relatively small expenditure can have a significant impact on the individual when combined with positive feedback and appreciation.

Trapped or Loyal? Trust is the Key to True Customer Loyalty.

I recently spoke at the 8th Loyalty Summit in Mumbai which focused mainly on the theme of customer loyalty. My presentation was about the clear links between employee engagement and customer loyalty, and how managers are central to building customer loyalty. Preparing for the conference caused me to reflect on my own experiences of customer loyalty. Were there any particular organisations that I was loyal to as a customer? And, if so, why?

I recalled my first experience of a loyalty program. I remember sitting in a stifling hot Australian classroom as an eight year old, enduring a representative from a bank espousing the benefits of saving and compound interest. It would be fair to say that the bank probably hadn't chosen their best speaker for the task, and the room of children were starting to lose interest. It was at that point that the man from the bank revealed a secret weapon. If we signed up for a savings account, we would receive a money box. Now, as an eight year old a money box is about as exciting as life gets. The loyalty program worked, and I signed up for an account.

Now that could have been the end of the story, but some 34 years later I'm still a customer with the same bank. In fact I do all my banking with that same bank, including for the business and some insurance as well. It's fair to say that the bank recouped the cost of their money box gift many times over. In fact, I found a similar money box in the bedroom of my nine year old son - the strategy hasn't changed!

But am I a loyal customer? On the surface I am. I've been with the bank for a long time. I use a range of products and services. I use these services almost daily. But, to be honest, I feel more 'trapped' than 'loyal'. It has just been too hard to change banks, and the bank hasn't annoyed me enough to force me to change. That doesn't really sound like loyalty. 

I contrasted that with my loyalty to a watch brand - Longines. For a period of time I took to eBay with a singular focus - to buy circa 1950 Longines watches from overseas and resell them locally on eBay. The idea was that I'd add a better description and photos, and make a bit of a profit. Clearly not enough profit to retire, but a bit of fun nonetheless. The challenge was to find out more about the watches I bought to add a more complete description.

Well, I thought, why not try the Longines website. So I simply used the 'contact us' link to ask what they could tell me about a particular watch based on its serial number. I honestly didn't expect any response - perhaps a 'thanks for your query, but we can't help you'. But within a few hours a response came back from a guy named Russell. It turns out that Russell worked for Longines in Switzerland and also quite liked the watches they produced across the 1950s. He had gone into the paper archives (I'm picturing the warehouse from Raiders of the Lost Ark), tracked down the paperwork and emailed me the production date, the sale date and even the name and address of the store that originally sold the watch. Pretty impressive record keeping, but even more impressive service. Over the next year or so Russell and I swapped details of watches, requiring him to take frequent trips into the paper archives. As a result, I would describe myself as a loyal customer of Longines. 

So what was it that made me loyal to Longines but not to my bank? Well, Russell was customer-focused. But importantly that customer-focus came from a genuine passion for the business and its products. He genuinely wanted to help me out, even though his company wasn't making a cent from my trading of second-hand watches. He was a passionate advocate for his business, and clearly engaged with his work. I trusted Russell. He provided good advice rather than trying to flog me a new watch. 

And the research supports this - loyal customers are produced where there is trust, great service, and engaged employees. The trust element is crucial - that's the difference your sales and customer service staff can make. But we also know that sales and customer service staff are typically amongst the least engaged with their work. Our challenge as leaders is to serve these frontline staff well - to ensure they are engaged with their work, aligned with the direction of the business, and committed to customers. That comes back to managers - they're the ones in the box seat to create an environment where trust and engagement flourish.

It turns out that Russell did have a great manager - a manager who presumably trusted that his trips down into the paper archives were worthwhile in furthering customer loyalty. Perhaps if there was a Russell at my bank they would have been able to gain true loyalty from me as a customer. The impact of a person like that trumps any reward points they might throw my way.  

So what about your organisation? Are your customers loyal or trapped? Do your managers inspire your frontline staff to further customer loyalty by building trust? Helping managers to understand the links between management styles, employee engagement and customer loyalty might be just what they need. Every business could do with another Russell.