Leading with Purpose: Alaina Love June 18, 2010, 1:01PM EST

Closing the Human Potential Gap

Only a third of workers feel fully engaged in their work. Leaders must rethink how they motivate and reward employees and tap into their passions

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The key elements to driving long-term sustainability in today's economy are innovation and productivity, both of which can be generated only through employees who are sufficiently motivated to contribute their best. Yet research by Gallup shows that just 33 percent of employees feel fully engaged in their work.

Since engaged employees are motivated employees, these data reveal that the U.S. economy is, in part, suffering because the bulk of the nation's employees are either not engaged or are actively disengaged. Of these, 25 million workers (18 percent) are actively disengaged, which Gallup estimates cost the U.S. $416 billion in lost productivity last year alone. The country is capitalizing on the potential of only a third of all U.S. workers. That creates a staggering human potential gap of nearly 70 percent.

Organizational growth and innovation do not progress in a linear fashion but rather develop through a culture of creative chaos, where people, purpose, and passions are the catalysts of breakthrough ideas. The creation and maintenance of such a culture—the sort that will help close the Human Potential Gap—require a new kind of leader.

Such leaders focus on people, not just systems. More importantly, they work to understand both the rational and the emotional sides of their employees, and they nurture culture and purpose as vigorously as they craft strategy. Breakthrough leaders engage in conversation with employees rather than deliver one-way communication, favor relationships over processes, and focus on igniting energy, innovation, and creativity as much as they do harnessing efficiencies, executing business plans, and delivering predictable results. In short, they support those who brave the chaotic, risk-laden, tortuous path to sustainability and success.

Combining the Material and the Emotional

Our economy is demanding that leaders develop individualized strategies for motivating and engaging employees—strategies that integrate a balance of traditional market-oriented thinking that focuses on material motivation and reward with an appreciation for the emotional drivers that act as incentives and inspire people. Consider a scenario in a traditional corporate culture in which a new employee is hired. The expectation of leadership (and of the new employees) is that they will be paid a fair market salary for their work. The benchmark for success in this cultural environment is increasing monetary reward.

Conversely, in a culture that promotes greater interplay between market-driven thinking and the emotional drivers of human behavior, the focus of leaders shifts. Here, employee motivation and engagement require more than monetary rewards and perks. Leaders in this environment must develop and demonstrate a deeper appreciation of the purpose and passions that drive each employee, so that work roles can be aligned beyond skill alone. In this hybrid culture, expected rewards and measures of success expand from money to include fulfillment—the kind derived from doing work in which one's passions have license to thrive.

From a leader's perspective, the outcome is well worth the investment they make in employees. Balancing the two approaches allows innovation and creativity to become cultural hallmarks of the organization. Employees in this environment experience profound engagement and deliver a level of discretionary effort—the kind you can't pay for—that turbocharges productivity. To be clear, we are not suggesting that people don't have a baseline expectation for being fairly compensated, but we are proposing that money is just one element in the elegant and dynamic process of motivating employees. And it may not be the most important factor in determining how much time and energy an individual is willing to contribute to the company. Likewise, organizational systems and structure will continue to be important, but leaders must address another critical element if they hope to reduce the Human Potential Gap.