If You Want Employees to Perform Better, You Break Out the Carrot and Stick. Right?

Posted October 24, 2014 by Layne Davlin
employee engagement across generations atlanta

What You Need to Know Today to Get the Best from Your 4-G Team

Your figure may be 10-12%, or even 40-50%, but if your business is experiencing anything approaching the astronomical 200-300% turnover rates prevalent in the hospitality industry, you know the administrative and HR nightmare that comes from managing four distinct generations in a single workplace. It’s a management environment that demands a fresh consideration of motivation and how to foster employee engagement.

Never before in recorded business history have we had four generations of workers in the marketplace at the same time. While Baby Boomers, Gen X, Gen Y, and Millennials work side by side, in many important ways they are worlds apart. The aim for anyone leading or managing a team is to bring out the very best of each member, which now requires knowing how to motivate workers from especially diverse generational cultures.

What motivates a Boomer will leave a Millennial cold. What nudges a Gen Y worker to step up his performance leaves a Gen X’er unfazed and unchanged. As a manager, you know first-hand the challenges that come from trying to inspire and motivate your multi-generational team: what works with some, backfires with others.

Meet the Generations

  • Boomers (1940’s – 1960’s) grew up seeing their parents work for a single employer until retirement. They heard, “It’s work… that’s why they pay you to do it.” While the lifelong job seemed intolerable for some, many still sought the stability of steady employment, motivated by the perks of achievement. Work, for them, was nothing if not an exciting adventure holding the promise of rich rewards for a job well done. They are largely motivated by money and recognition; the carrot playing a far more prominent role than the stick. Understandably, there is a higher incidence of workaholism among Boomers than any other generation. They look forward to their annual review, at which they know they are likely to be rewarded for their hard work.
  • Gen X (1960’s – 1970’s) was the first generation of latchkey kids, urged to get as much education as possible so they could become independent adults. They represent an odd hybrid, simultaneously craving structure, yet also eager to be self-directed. As leaders, they are egalitarian. As followers, they are skeptical, asking “why” a lot. They have a strong dual craving for positive feedback and freedom, working to live more than living to work.
  • Gen Y (1970’s – 1980’s) grew up in dual income homes with high parental involvement. They adopted and embraced technology like no generation before them. Typically confident, ambitious, and achievement-oriented, this generation questions authority constantly. Their ideal employment scenario features a balance between work and non-work time, allowing them the freedom and income to pursue other interests.
  • Millennials (1980’s – 2000’s) are flummoxed by the idea of working for one company for an extended period of time. They view work as a means to an end – financing a lifestyle they enjoy. They want immediate feedback, meaningful work, and a sense of connection and community. For them, it is not a matter of whether they will change jobs in the next year or two; it’s a matter of how often they will. They are happy at work when they feel their opinions are heard and valued. They want to feel a connection to their teammates. If they’re not feeling it, they seek greener pastures with little hesitation.

employee engagement across generationsPut the Carrot and Stick on Ice

Take any Management class and you’ll learn all you need to know about carrot and stick employee motivation – except that it no longer works, especially with the youngest members of the workforce. Carrots and sticks are great at prodding some employees toward compliance, but completely ineffective at boosting the sort of engagement that inspires stellar customer service, market-disrupting creativity, and impeccable integrity.

Managers today are beginning to see the futility of using external motivators to try to wring the best possible results from their youngest employees. While the older generations would have gone to herculean lengths to earn a merit bonus or to avoid a performance-based pay cut, these motivators prompt no more than a yawn from the next generation.

The Name of the Game Now Is Engagement

When workers are engaged, they feel valued, as if the sacrifice of their time and autonomy to further an employer’s goals is worthwhile. Engaged workers are absorbed in their jobs, producing their best work as if they had primary ownership of it. They feel connected with their colleagues, eager to collaborate, cooperate, and even cover for one another when needed.

In an environment where engagement is lacking, turnover is high, and profits and morale subsequently tumble. Workers long to have a passion for their jobs, to feel fulfilled, and to be challenged to excel.

Engagement is, surprisingly, not necessarily the hallmark of your highest-paid, most seasoned workers. In more than 40% of organizations, it is the low performers who are more engaged than their higher-performing coworkers.

In a recent “State of the American Workplace” report from Gallup, managers get confirmation of what they’ve already intuited:

Engagement Makes a Difference to the Bottom Line

  • Engaged workers are the lifeblood of their organizations. Work units in the top 25% of Gallup’s Q12 Client Database have significantly higher productivity, profitability, and customer ratings, less turnover and absenteeism, and fewer safety incidents than those in the bottom 25%.
  • Organizations with an average of 9.3 engaged employees for every actively disengaged employee
in 2010-2011 experienced 147% higher earnings per share (EPS) compared with their competition in 2011-2012. In contrast, 
those with an average of 2.6 engaged employees for every actively disengaged employee experienced 2% lower EPS compared with their competition during that same time period.
  • Gallup estimates that active disengagement costs the U.S. $450 billion to $550 billion per year.

How to Foster Employee Engagement

Boosting feelings of being connected, fulfilled, passionate, and challenged is now mission critical for managers. But how is that accomplished?
The first step is throwing the carrot and stick model of management away. Extrinsic motivation is obsolete; intrinsic motivation is the new aim. As Dan Pink discussed in his 2009 TEDGlobal talk, managers now get the best results when they AMP up their workforce.

  • Autonomy – Employees prefer to be self-governing in the particulars of how they do their jobs. Approaching a Results Only Work Environment (ROWE) may yield the best results. As long as the job is done well, the level of managerial oversight can be minimized. Pay your team adequately and fairly, then grant them the autonomy they need to do their jobs well.
  • Mastery – Rather than striving meet a set of uniform performance expectations regardless of their unique strengths, employees prefer to have the opportunity to contribute those strengths, unfettered, so they can give a truly shining performance.
  • Purpose – Employees crave meaning in their jobs, and do best when they can connect even seemingly menial tasks with a grand outcome. They don’t mind doing whatever is needed, as long as they can see that it matters… and it does. Every position is significant to the mission of the whole organization; it takes just a quick look back at the New York City sanitation strike to prove that point.

In addition to building AMP into your company’s culture, it’s also important to re-think how you handle reviews, compensation, and rewards. Considering these matters can save your business the needless expenses incurred with high turnover, typically three- to four-times the salary of the departing worker, once you consider the cost of hiring and training new employees.

employee engagement atlantaAsk Them What They Want

Older generations hung in there, whether they liked their jobs or not, for the promise of a 3% increase each year. For them, the annual review was the norm: here’s what you’ve done well, what you didn’t do so well, and how you can improve.

The younger generations, maybe conditioned by the immediacy of social media, want instant feedback on their performance – especially if it is favorable. They are somewhat unaffected by the threat of being fired, because they believe finding another job will be fast and easy and that job changes are to be expected. Pay, as long as it is adequate, is a less important motivator. It is the intangibles that matter most.

You may discover that Millennials want much more than just a paycheck and a robust set of benefits. They want recognition, flex time, the opportunity to fulfill their dreams.

While the adjustment to a management and motivation style that resonates with the younger generations may seem inane to some, it’s important to remember that within the next decade, many of the Boomer generation will be retired. The workforce will be comprised of the younger generations.

The challenge for you as a business owner or manager is to find ways to keep your employees engaged. Do this, and you will enjoy the profitable benefits that come from more consistent delivery of your products and services, better customer service, and avoidance of the high costs associated with rapid turnover.

About the Author
Layne Davlin, founded Einstein HR in 2007 after years in the human resources industry. He provides a host of integrated human resource solutions to solve personnel issues for his clients, showing them better ways to attract, manage, and retain their workers. You can download a free white paper explaining the benefits of using a professional employer organization (PEO).