How to keep your workers happy

Looming over the motorway snaking north from New York up to Stamford, Connecticut, the heart of America's hedge fund country, is the new American headquarters of RBS. The glory days of "Fred the Shred" Goodwin may be long gone but the firm's US bankers are forging ahead in a brand new £300 million headquarters. Hair shirts are for losers. This lot even have masseurs to ease away the stress of trading.

"It has been a source of pride and a kind of a rallying cry," Robert McKillip, the co-head of global banking and markets in the Americas, told The New York Times. "We've been through a lot."
As indeed have British taxpayers, one might add, though there are no masseurs and stock bonuses for them. But RBS's decision to relaunch from gleaming new offices raises the question of what it takes to motivate employees when all around is gloom. They'll stick around for now, if you can afford them, but neglect them in the bad times and they'll be off the moment the economy turns around.

According to Jay Conger, co-author of The Practice of Leadership: Developing the Next Generation of Leaders, "the largest predictor of whether someone will stay with a company is their satisfaction with their immediate boss." So how do you keep someone satisfied with no extra budget?

During recessions, perks such as free coffee and gym memberships are often the first things to go. Next, benefits once considered necessities become dispensable perks: childcare, continuing education, health benefits.

These cuts may be more demoralising than cost-effective because the links between what a company spends on employees and how much they are motivated are complex. The motivation to stay with a company for the long haul is found at a deeper level than salaries.

Researchers into non-monetary motivation have found that employees work much better when they meet the beneficiaries of their work. A study of university fund-raisers, for example, found that when they met the scholarship students helped by the funds they raised, their job satisfaction and performance went up dramatically.

This also explains why authors are often so eager to do book signings and readings. Meeting their readers keeps them motivated through the months and years behind a keyboard.

Technology has led to employees being physically removed from the people they help, say researchers. It creates a sense of isolation and futility. Closing that gap, preferably through face-to-face meetings, can have an extraordinary effect.

One common mistake companies make during hard times is to become more controlling, when the opposite might help. When money is tight, it makes sense to find ways to offer meaningful non-monetary perks. These will differ from employee to employee. One might need to work from home more because of reduced childcare provisions. Another might need extra time to go to a new gym because you dropped corporate memberships at the one next door.

Boris Groysberg, a professor at Harvard Business School and motivation specialist, says the trick for any company is "to find the levers where the value to the individual is greater than the cost to the company".