This is the second article of a two-part series by Lewis Silkin LLP. In this article we explore what motivates people to work and the opportunities and challenges that presents for employers in attracting and retaining talent. In our first article, we investigated the drivers behind the evolving labour market and the phenomenon often labelled the “Great Resignation”.
What motivates people to work?
The psychology behind employee motivation is complex. A large number of motivational theories exist with a range of views on the extent to which the evidence base is sufficient to support each theory. Indeed, there is even divergent opinion on how best to measure motivation itself.
Below we touch on a widely known motivational theory proposed by Abraham Maslow alongside a number of more recently developed theories and consider what they can tell us about motivation in the workplace. Further detail can be found in the 2021 CIPD’s Work motivation: an evidence review.
Maslow’s hierarchy of needs
Maslow’s hierarchy of needs was formulated in 1943 and refined over subsequent years. It is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchal levels within a pyramid. It has often been applied to the workplace as a means of determining how best to motivate employees and meet their needs. The theory suggests that in order to move up the pyramid, the majority of an individual’s needs at one level must be met. This theory suggests that continuous progression up the pyramid is what motivates employees, both in their individual career and in terms of facilitating the success of their employer.
Level one – psychological needs
Before thinking about happiness at work, employees need their innate human needs to be satisfied. This means a job which facilitates their basic needs by providing them with sufficient money to afford food and a home.
Level two – safety needs
When their foundational human needs are satisfied, employees can think about security in their employment. For many people this security focuses on protecting the financial stability the job affords them, for example, by having a contract of employment which offers some guarantee of their income.
Level three – belonging needs
When employees basic needs are safely protected, individuals are then in a position to look beyond a transactional relationship with work. Unlike survival or protection of that survival, which are contingent on employees’ obtaining a job, this need is felt on a more emotional level. At this level employees want to feel as though they belong to, and are part of, a workforce.
Level four – esteem needs
If employees can connect with their colleagues, all the building blocks are in place to enable them to progress their professional life. It’s at this stage employees have the infrastructure to develop confidence in their work.
Level five – self-actualisation needs
At the peak of the pyramid is the proposition that employees are fulfilled. All their workplace needs are met which motivates individuals to continue to excel in their work and remain at the peak. Characteristics of individuals at this level include people who can tolerate uncertainty, are problem-centered, are highly creative, can establish strong interpersonal relationships, and have strong moral and ethical standards.
It is well recognised that this hierarchy is not stagnant, but rather provides a barebone structure which can morph within the context of employees’ circumstances at a particular time. This is evident from the image from Vantage Circle below, which illustrates the shift during the Covid-19 pandemic.
Infographic taken from Vantage Circle (Oct, 2021)
Other motivational theories
Counterbalancing this traditional hierarchical approach to employee motivation are a number of other studies which indicate that the fundamental needs in Maslow’s hierarchy are less important in driving performance. For example, in a wide ranging study of employee motivation, Harvard Business School, in conjunction with psychologist Steven Kramer, identified that the most important motivational factor for employees at work was what they termed “small wins”: employees are highly productive and driven to do their best work if they feel that they are making progress every day towards a meaningful goal.
Another study based on psychologist Susan David’s work with highly engaged employees, described their main motivation at work as “feeling autonomous and empowered, and a sense of belonging in their team”.
What is apparent from the range of motivational theories is the fact that no two employees are the same and motivation can depend on external circumstances or individual differences, with most behaviour being multi-faceted. As we identified in our first article, the needs and motivations of a post-pandemic workforce are being shaped significantly by a number of interconnecting drivers of change.
What are the challenges for employers?
As we’ve explored during the course of the pandemic in our Future of Work Hub discussions, employees are now considered the most important stakeholder to companies’ long-term success.
Potential challenges will vary from employer to industry but there are some common areas of particular focus.
Virtue signalling
As James Davies, Employment Partner at Lewis Silkin LLP explains in his “Eight drivers of change” report, the global workforce is increasingly intolerant of inequality and stands ready to call employers out. Similarly, as Tarun Tawakley and Emily Atkinson, Employment Partner and Associate at Lewis Silkin LLP highlight, publicly supporting campaigns (such as #MeToo or Black Lives Matter) that are generally supported anyway but not addressing less ‘agreed’ issues can even be considered a statement itself. Where employers demonstrate values which people consider to be misleading or false, those businesses risk being publicly shamed on social media – seen by potentially millions and severely impacting the businesses’ reputation.
Culture mismatch
While any business can succeed to an extent by excessively paying their workforce, without the right culture there will be an insurmountable barrier to attracting and retaining the best talent. Critically, culture too cannot be subject to virtue signalling – as Tarun Tawakley and Emily Atkinson note – fostering the right culture requires leadership to have the values the business claims to hold close.
Missing the point
Pressure is building on employers to address what their employees want. While some employers continue to throw money at the problem (with some businesses even offering money to simply interview), as 2021 McKinsey research notes, this reinforces the idea that the relationship is primarily transactional and their needs are not being met. Microsoft research from 2021 indicates 41% of the global workforce are likely to consider leaving their employer within a year – some may be satisfied for now with a pay rise, but employees want more to avoid searching for new pastures.
What are the opportunities for employers?
As the workforce re-evaluates their relationship with work, employers must be able to justify the when, where, how, and why their employees work. Businesses who can capitalise on the opportunities will reduce the impact and cost to the business of high levels of attrition and recruitment – Ian O Williamson notes it is estimated to cost on average 122% of a departing employee’s annual salary to find and train a replacement.
Value driven businesses
A 2021 McKinsey survey of US workers found that 70% of employees said that their sense of purpose is defined by their work. With employees increasingly choosing mission-focussed companies that share their values, putting employees at the core of a business allows the fundamental values of the workforce to be instilled in the business as it grows. Many people are expecting employers to evolve their policies and practices to align with their values more closely – even incorporating high value policies just to stand out. As James Davies notes, going beyond what law forces you to do can translate to competitive advantage. This is why – as Kit Krugman, Chief Curator at Co:Collective, highlights – employers with society and their workforce as a priority have 25% higher stock value than comparators.
Equity and fairness
As identified in this 2022 CIPD Incentives and recognition evidence review, if employees feel they are treated unfairly or arbitrarily, this can damage their motivation and performance. The review explains that this isn’t solely a remuneration issue, but extends to the justice in decisions, allocation of resources, procedures, how people are treated, as well as equality. Additionally, Gallup research suggests that 70% of employees’ motivation is influenced by their managers. Foundationally, managers need to ensure that they create an environment which is fair and respectful and that recognises individual and collective achievement. As Eliza Filby articulates in a recent podcast for the Future of Work Hub, people want to be proud of what their employer achieves – both within the workplace, as well as in the wider community and society as a whole.
Sense of belonging
Even before the pandemic, a sense of belonging amongst a workforce was already crucial to the success of the business. Research published in the Harvard Business Review in 2019 indicated where businesses had high levels of belonging there was a:
56% increase in performance;
50% decrease in turnover risk; and
75% decrease in the amount of sick days taken.
This equates to over $52 million worth of savings for an employer with 10,000 employees. Similarly, that research also found this higher level of belonging increased an employees’ willingness to recommend the employer by 167%. Workforces starved of their sense of belonging during the pandemic are now increasingly seeking opportunities to satisfy this psychological need.
Like values, there is no blueprint to create the ideal sense of belonging. However, as James Davies notes, a key factor is socialisation which helps connect colleagues and foster the sense of being part of the team. Once there is a sense of belonging within a workforce, employers must continuously work to sustain this. Research by LinkedIn in 2018 highlights that 94% of employees would remain with an employer longer if they invested in their development – failing to do so is a clear indication to the workforce that their employer isn’t invested in their career and could lead them to question whether or not they really belong.
The “Great Reconfiguration” and the future of work
The traditional dynamic between employers and employees is changing. As of May 2022 there are more job vacancies than unemployed people for the first time since records began, highlighting the unprecedented fluidity of the labour market. The combination of a number of drivers and a global pandemic mean we are in the preliminary stages of a fundamental shift in our perceptions of work. Employers able to meet the challenges ahead will have the best chance to build resilient and motivated workforces and create competitive advantage in the uncertain landscape of work ahead.
This second article of our two-part series was written by Sam Berriman at Lewis Silkin LLP.
Click here to read the first article of this two-part series.