Thursday, December 16, 2010

How To Excite Employees - Or Not

Today we received a second round of stock options.  As before, I was disappointed by the size of the grant.  I asked others in the group how they felt about it and got a range of responses: while one person was indifferent, another saw any option grant as "found money" and, therefore, didn't care about its size.  Another developer felt like me: the grant was so small, it was useless as an "incentive": if the company were to have an initial public offering or get sold, the executives of the company would make out like bandits, while the employees will see no lifestyle-affecting windfall.

That got me thinking: what makes software developers come to work every day?  What motivates them?  The two obvious motivators are money and fear (of loss of employment).  What about things like the desire to learn new things?  The need to socialize and be with like-minded people?  Who are the people in these groups?  How does a company address these somewhat diverse groups to achieve greater productivity?

The Money Motivated.  Let's face it, most of us fall into this category to one degree or another.  Some of us are motivated by the almighty dollar because we need it to afford a certain lifestyle.  Others see it as a measure of success or appreciation by the company they work for.  In small companies, where there is little or no chance for titular advancement (another way a company can show appreciation), monetary rewards can become the only meaningful measure of appreciation.

The Fearful.  While some are motivated by money to afford a certain lifestyle, others are simply happy to have a job.  They need the job to put food on the table, to make the mortgage payment, or to pay for the children's college education.  And they're afraid of the prospect of having to look for another one.

The Curious.  There are some folks who work at a company because the company allows them to learn and/or explore new things.  These are typically people who may have become academics if it were not for their lifestyle choices (i.e. they like expensive thing) and the scarcity of academic jobs.

All but a few lone wolves have the need for socialization and interaction with other like-minded people.  When people are happy with the people they interact with, they're motivated to stay.  When dread coming to work because of who awaits them, they want to leave.

What can the management of a company do to "incentivize" these diverse groups to be more productive?

Pay More.  Unfortunately, many small companies - especially in these economic times - may have difficulty increasing salaries or paying hefty bonuses.  When direct renumeration is not possible, a company can incentivize its employees to work harder by offering stock options - i.e. the promise of a large "payout" in the future in lieu of salary increases and bonuses in the present.  But as you can see from my introductory complaint, allocating option grants can be a tricky thing: if you give employees a generous grant, they'll be happy, but the costs to the company may be high or there may not be enough shares for future allocations/incentives.  If the grant is perceived as stingy (or unfairly distributed between workers and executives), the grant becomes meaningless as an incentive tool.

Provide A Good Workplace.  An environment where people can freely interact with one another, where new ideas are welcomed, and where the workers are given enough leeway to be innovative can be a great motivator to many employees.  If, in addition, the company makes visible attempts at providing the employees with the tools (computer, comfortable chair, etc.) to make them more productive, employees will be happier and more productive still.

Do Nothing.  Some companies (typically those that have no vision and/or are just hoping to be acquired by someone and/or are ruled by bean counters) may decide to do just that.  Productivity gains are not a top priority.  The self-confident money- and curiosity-motivated employees eventually leave, leaving only the fear-motivated and the timid.  The departed are replaced by new employees who know little of the product and are, therefore, less productive and the old-timers are expected to pick up the slack.  Or not.

If you're an employee, where do you fall in the spectrum?  Is your company successful at making you happy and more productive?  If you're an executive at a small company, have I captured the essence of your predicament?  If not, comment with your thoughts!

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