The FINANCIAL — Company bonus schemes are ineffective at motivating employees or improving performance, according to a study of personnel professionals. Money is not everything, says Georgian expert. The FINANCIAL is researching how Georgian companies motivate their employees.
A poll of 183 HR directors and managers carried out by employee reward firm Innecto People Consulting found that despite bonuses coming top of the list of processes thought likely to motivate employees, more than six out of 10 (63 percent) felt their bonus scheme was ineffective in improving workplace performance.
“To signal the importance of sales and tailored, differentiated service, banks need to create sales cultures that measure and reward employees (in the form of commissions and bonuses) for building relationships, generating revenue, and satisfying customers’ needs. Anyone can work a calculator. But how many of us listen closely to what those around us really need, or confirm what help they are asking for?” explains Dr. Peter Chiaramonte, a writer, professor, and senior university administrator.
“Concerning the monetary rewards, we need to know what might be the appropriate amount that will motivate the employee. Just saying that you have bonuses and salary increases is not enough. Whether or not this amount is the real motivator for the worker is a question managers must address. Money is not everything. The personality issues and cultural backgrounds should be taken into consideration,” Akaki Kheladze, Head of the Management Department of Caucasus School of Business (CSB), told The FINANCIAL.
Georgian banks use several ways for motivating their employees. Bank of Georgia (BOG) uses sales bonuses, trainings and best employee nominations.
Bank Republic has staff recognition and award programmes.
“We have special monthly, quarterly and annual nominations for the best employee in sales, customer service, management, Employee of the Year etc. The winners of the nominations are awarded with certificates, gifts, gift cards, etc. Plus we have special events for our staff,” says the Bank Republic representative.
Cartu Bank has two types of nominations: changeable and unchangeable. The list of unchangeable nominations is defined by HR committee at the end of the year at the initiative of the HR department. Unchangeable categories include: the Best Credit Expert, the Best Account Manager, the Best Cashier, the Innovator, the Collegiate Person, the Most Disciplined Employee. The winners are awarded special certificates and valuable gifts.
One of the fastest developing Georgian banks TaoPrivatBank says top successful employees are rewarded financially, equal to 10 percent of their monthly salary.
A couple of weeks ago The FINANCIAL received a letter from a 19 year old bank employee who works on business loans at one of the leading Georgian banks:
“It was November 6 when the stream of clients for business loans stopped coming to the maximally self-empowered experimental branch of Bank “X”. The place where the head of the branch has no longer the functions of traditional manager, but of leader because of the high delegation and independency of the branch from the entire bank.
Unfortunately, the problem that came out had not been foreseen.
It was already November 15. No clients had even entered the door of the building. That was when the management that is about organization, methods and processes, was no longer needed, but we; we needed fresh ideas and actions, experiments, in other words – Leadership.
That was the point I called all our colleagues together and began to generate ideas, the ways of promoting the branch service, making plans and telling people how to reach the door of salvation, and how to open it.
Everyone loved my ideas, but wait. Will the head of the branch ever listen to the words of a 19 year old RSO, who has no real experience, and want him to lead? No.”
The answer I got was simple: “Hmm, your ideas are awful.”
Was the decision that the manager made in this case right? How could the manager improve and delegate bright ideas from his employees in this case?
“Unfortunately there are many cases like this one in our reality. It is an example of how creativity, leadership and motivation can fall. When a company has a culture that allows open sharing and the expression of ideas they have a much higher success probability. In any idea there may be some share of creativity. In that case successful alternatives must be addressed,” said Akaki Kheladze, CSB.
“Effective management entails effective listening, coaching, advising and trying to find a positive part in each idea. Closing the door and saying a categorical “no” is not a way out. Both in the short-term and long-term we’re losing creative ideas.”
“In this case the manager lacked leadership. Having good personal relationships with subordinates is of core importance for managers. My recommendation would be not to treat newcomers as risky areas and not to be afraid of giving them more responsibility. Newcomers should not be only the collectors of information. They must have some decision making right too.”
“We need to understand that motivation itself has strong links with performance. To have good performance you need to motivate employees well. When talking about non-monetary motivators we have to be aware of the specific concepts especially in the banking sector. In the banking sector we mainly get some routine structured and specialized work. So to increase motivation we need to do job redesigning for employees to use their skills better and give them the right to make decisions,” explains Akaki Kheladze.
“Nowadays Georgian companies are trying harder to have effective and efficient employees. But this is not enough. They have to conduct more informal meetings so that people can express their leadership potential. Another issue is equity. How is each employee treated? Employees should know that the change in a salary’s amount was fair. Unfairness decreases motivation. In this case employee becomes inefficient workers. Increased turnover and other factors cost western companies millions of USD,” he says.
Cartu Bank conducts an organizational survey once a year. Its aim is to study: The employees’ satisfaction with their salary, the style of the management in the organization, career development potential.
“We regard each employee, despite the kind of the job he/she performs, as a valuable asset to the company. Each of the staff members has the possibility of professional growth and development. In the case of a vacancy, any worker can participate in the internal contest, and try to advance in his/her career. In the fields where the chances of career advancement are low, the bank tries to compensate this by the professional growth (trainings) of the employees,” says the Cartu Bank representative.
According to the HR Department of Bank Republic, the company cares about the development of its personnel, offering training and education opportunities locally and abroad.
“Bank Republic regularly sends representatives of top management on leadership courses abroad. Career development issues are closely followed. The HR team takes care that staff are not demoralized and are not stuck too long in the same position that can no longer offer development.”
“In the post-soviet era we know that top management is the only decision maker and just directs the lower levels. Today the world has changed, we need information; we need feedback from any level of the organization, where everybody works as a team,” Kheladze says. “Promoting competition among subordinates is a good idea only if it’s an issue based and outcome oriented competition. We shouldn’t forget that malfunctioned competition based on personal interests has a clearly negative effect on the company.”
Bank Republic plans to establish a pension fund scheme by 2010. Currently the company is offering saving schemes to its staff (Global Employee Share Ownership Programme). This programme enables employees to buy SG shares under privileged conditions and get dividends. Besides BR covers a big part of the purchased share price. Employees are able to sell their shares after 5 years or in the case of special circumstances.
Below are 11 ways to motivate your workers offered by Akaki Kheladze, the Trainings Coordinator of CSB:
1. Provide an environment that fosters employees self-actualization. Human beings are motivated to growth, achieving their potential and self-fulfilment.
2. To motivate an employee it is not enough to eliminate dissatisfaction factors. In this case you’ll get an employee who is neither dissatisfied, nor motivated. To motivate a person you need to add an extra factor, called a motivator (such as bonuses).
3. Humans have the need for affiliation, meaning that they have the desire for friendly, warm, interpersonal relationships. Provide them with such in an organizational atmosphere.
4. Delegate and empower your employees. Give to subordinates appropriate autonomy so that they can experience responsibility for the outcomes of their work.
5. To eliminate boredom, fatigue, stress and other negative effects from routine jobs, assign jobs that require skill variety, jobs that are significant. Employees will experience the meaningfulness of the work.
6. Employees make comparisons of their job inputs (i.e. effort, experience, education, competence) and outcomes (i.e. salary, raises, recognition) relative to those of others. Do not produce in your employees feeling of inequity, otherwise at the end of the day there will be de-motivated employees.
7. Money motivates, but when making decisions consider the perceived fairness of the amount and allocation among individuals and the perceived fairness of the process used to determine the distribution of rewards.
8. Allow subordinates to participate in important and company-wide decisions. Create a team and participative organizational culture.
9. Present and describe explicitly how career growth is achieved.
10. Be a visible role leader. A manager’s actions and behaviour signals what is appropriate and what is not in the organization.
11. Provide feedback. Feedback must be in timely and needed order. Feedback provides opportunities for clarifying expectations and gaining recognition. It is important to provide benchmark opportunities for individuals to determine how they are doing.
Written By Levan Lomtadze