Motivating Without Money

Keeping employees engaged is critical during an economic downturn. Here are some smart ways to do it

By Matthew Boyle

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In the months after September 11, as business activity slowed to a crawl, Steve Kerr, then the chief learning officer at Goldman Sachs (GS), launched a leadership seminar for senior managers that he nicknamed "Motivating Without Money." The daylong sessionsdiscussed how Goldman's managers could use nonfinancial incentives to energize their staff. While well received, the seminar was discontinued when business perked up again a year or so later.

Last fall, however, Goldman brought it back, widening the audience to include Goldman's clients. (It's now called "Motivating Your People in a Challenging Environment.") "We got more people than I expected," recalls Kerr, now a senior advisor to the bank and author of a new book, Reward Systems. As for why bonus-obsessed Wall Street hotshots would be so receptive to his "money isn't everything" message, Kerr says: "I guess any reward in tough times is valuable."

Low Morale After Layoffs

He's got that right. These days, with layoffs rampant and companies slashing budgets across the board to weather the economic downturn, motivating employees to bring their "A" game to the office every day is harder than ever. According to a survey of nearly 80,000 employees by the Corporate Executive Board, one in every five employees now consider themselves disengaged from their job, compared with one out of ten last summer. What's more, two out of three companies surveyed in late 2008 by market research firm Quantum Workplace had lower overall employee engagement scores compared with a year earlier.

Some managers may feel that unmotivated employees are not a huge problem. After all, where are they going to go in this crummy job market? But such an attitude is short-sighted, says Jeff Summer, who leads the U.S. talent management practice at PricewaterhouseCoopers (PWC). "[The best] employees are still in high demand, so if their organization is not motivating them, they're moving," he says. The challenge, then, is not only to get them to stay, but to shine.

Summers recounts a recent call from a client in the technology industry. The company had conducted a layoff, and soon afterward it lost three employees it had wanted to keep because managers, absorbed in the layoff process, did not effectively communicate to those who remained how they would move forward. "When you lay people off in a recession, those who are left behind have to be more engaged than ever to pull you out of it," says Chester Elton, co-author of The Carrot Principle, which details how companies like PepsiCo (PEP) and Quest Diagnostics (DGX) use formal recognition programs to keep employees engaged.

Middle Managers Must Lead

At times like this, remember that "CEO" does not stand for chief engagement officer. He or she is too busy figuring out how to keep the company afloat to do much more than transmit a companywide e-mail or Webcast. The responsibility for this falls upon middle managers, whose words and behaviors, studies show, have the most impact on employee engagement (or disengagement.) "Creating a resilient workplace that can deal with trauma and come out engaged on the other end is not a senior executive's role," says Tom Davenport, a principal at Towers Perrin. "It's a line manager's job."

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