“Can we only keep our good employees by giving them a raise or are there other ways?”

I was asked this question today by a manager who works for an organization that couldn’t give raises to their staff in a while, due to the financial crisis. Here is my response:

People do not only have a need for money – there are other motivational drivers that are way more important (as long as they have enough money to cover their basic needs – see Maslow’s Hierarchy of Human Needs or Dan Pink’s Talk on “The surprising truth about what motivates us”).

Employees want to feel heard, they want to be respected for who they are and what they know and they want to feel valuable by making a difference. So my recipe for your particular situation is this:

1. Share & Communicate openly

Explain to them that you are aware they haven’t received a raise in a while and that you can’t foresee when you’ll be able to give them one. Give them reasons for it. The “why” is very important (in as much as you can, without giving away confidential information). If it “makes sense” to them, it will lead to acceptance.

2. Make your staff feel valuable & appreciated

Tell them how much you appreciate them and that you’re concerned about them leaving. Tell each individual what you appreciate them for, so they all go, “Wow, my manager DOES see me and recognizes my talents, knowledge and needs.”

Do NOT generalize, as in “You’re all appreciated.” You need to reach every individual, even if you speak to them in a group meeting.

3. Involve them

Ask them what they (each individual) need from you, in order to stay and be happy even without a raise for a while. Some might want a more challenging project, others might want an hour off per week to take an online course, others might want to become mentors to junior colleagues and some might be happy just because you’ve been honest with them and shared your concerns and let them know they’re important to you.

4. Take their needs and concerns seriously

Respond to each individual’s requests/needs you found out above. That doesn’t mean that you have to accommodate them all. It just means that you get back to them and tell them, eg. “I looked into it, however there’s no project available for you at the moment. I’m really sorry, but I promise you I’ll let you know as soon as I hear about something!”

What discourages people is when they’re being surveyed and then nothing ever changes or nobody ever gets back to them. Most of them do realize you can’t work wonders and accommodate their every wish. All they want is to be heard and taken seriously.

5. Repeat the cycle from point 1

Keep communicating this way. Keep them involved. Keep repeating this process and ask about their needs. Use this time to really connect with your staff and always let them know how they have been making a difference in your team.

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The only way to keep employees in a company by recognizing their needs and responding to them. This is “Before-The-Fact-Recognition” and creates sustainable motivation that will last even through a financial crisis – as opposed to “After-The-Fact-Recognition” which consists mainly of rewards (for achievements) and only gives short boosts of motivation (as long as the rewards keep coming).

If you give people a chance to grow, to be involved, if you make them feel valuable by giving them a chance to make a difference (to the company, their colleagues, your clients, etc.), if you ask them for their opinion, so they feel respected and important and if you openly communicate your concerns and that you do recognize their needs – then you’re creating a relationship (a psychological and emotional bond) with your employees that they won’t break just because someone offers them more money.

Thank you for being a concerned manager!