Leading with Purpose or Purse? How to motivate employees

How can leaders motivate employees to go the extra mile? Is it by making employees aware of the purpose of their work? Is it by paying high salaries? Or is it none of these?

28-10-2020 | 13:26

These and other questions were discussed in the second MBA talk by Professor Svetlana Khapova (VU Amsterdam), Edson Hato (VU Amsterdam, formerly ABN AMRO), and dr. Sergey Gorbatov (VU Amsterdam and IE Business School). Some of the key take-aways from the webinar are:

• "People are motivated by different things." There is no one-size-fits-all approach regarding employee motivation, because people have different needs and wants. Good managers know what drives their employees. Thus, it’s not an "either-or" (that is, purpose or purse), but it can be both (in addition to several other factors).

• "People change." Just because people were motivated by a higher salary early in their career does not mean that money has the same value at later stages. People’s needs and wants (and even their purpose) shift over time and managers need to be aware of this and understand the most important needs of their people.

• "Small things matter!" It’s not always the big salary increase or the prominent corporate purpose that motivates employees. Rather "small things," such as providing feedback, or sending a hand-written letter (especially in times of physical distancing) together with a small gift, matter a lot to employees, because they signal that they and their work are recognised and appreciated.

• "Managers matter, too!" The discussion around employee motivation often focuses on what the organization can offer to its employees. However, the direct supervisor is at least as important for employee motivation (if not more) than the organization. Thus, managers should ask themselves how they can motivate their employees (and how they can avoid demotivating them).

• "Don’t wait until a person is demotivated." It’s very difficult to turn a demotivated employee into a motivated one. Therefore, managers and human resource specialists need to be very aware to act immediately if a person or a team shows signals of being demotivated. Often, this requires a change of scenery (for instance a new supervisor).

• "COVID-19 poses significant challenges, but good managers can still motivate employees." People are worried about their jobs, families, and health during crises, such as the COVID-19 pandemic. Thus, managers shouldn’t (just) be "content-driven leaders" at such times, but show that they care about their employees. For instance, they can send "safety signals" to their employees (for instance by announcing that no jobs will be cut within the next couple of months) and create a "sense of community" (for instance by scheduling regular "coffee calls" where employees meet virtually and talk about non-work topics).

The discussion has shown how complex the topic of employee motivation is and that often proclaimed "solutions," such as purpose and salary, are not sufficient. Especially leaders need to be aware of their influence on employee motivation and need to understand the consequences of their actions—and inactions!

Recommended readings

  • Kanfer, R., & Chen, G. (2016). Motivation in organizational behavior: History, advances and prospects. Organizational Behavior and Human Decision Processes, 136, 6-19
  • Nohria, N., Groysberg, B., & Lee, L. (2008). Employee motivation: A powerful new model. Harvard Business Review, 86(7/8), 78
  • Rynes, S. L., Gerhart, B., & Minette, K. A. (2004)
  • The importance of pay in employee motivation: Discrepancies between what people say and what they do. Human Resource Management, 43(4), 381-394

This MBA Talk is part of Vrije Universiteit Amsterdam's School of Business and Economics webinar series. More information and registration

Jost SiewekeAuthor
Dr. Jost Sieweke is an associate professor at the Department of Management & Organization at Vrije Universiteit Amsterdam. He is also the programme director of the new Executive MBA: Leading with Purpose at the School of Business and Economics.