According to the 2023 Salary and Recruiting Trends Report* by Hayes, 56% of employees are willing to take a lower paid job for better work/life balance. One aspect of this work/life balance is doing a job, and working for a business, which aligns with your values and purpose.
This report highlights a disconnect between what motivates employees, and what many business owners think motivates employees. Which itself has deep ramifications for succession planning.
What Motivates Employees
I first came across this disconnect in the excellent book ‘Drive’ by Daniel H Pink. This describes how we used to be motivated to work harder by the offer of a financial reward.
Jobs typically involved following a series of stages. This meant that the more efficiently you completed those stages, the more productive you were. Targets could be set for the number of tasks achieved or speed of completion, and financial rewards easily calculated.
Two changes have happened over the past generation or so. Firstly, jobs which can be broken down into stages can now be done by a computer. This means that the nature of work has changed. It is now much more about being given an objective, and having to find solutions. The speed with which you complete the task is no longer the most important measure, but the quality of the solution.
This makes it much harder to evaluate performance and offer targets and financial rewards.
The second change is a cultural one. Many of today’s business owners started their business owning life in the era of Thatcherism, where the objective of one’s working life was often seen to be the accumulation of wealth.
The younger generations don’t tend to see the world in that way. The existential threat of climate change means that many scientists believe we are in the midst of the sixth mass extinction that the Earth has experienced. Just having that as a possibility changes your approach as you set out on a career.
There are several ramifications of these changes for succession planning.
Traditionally, owners have sought to lock in employees by allowing them to buy shares. This might be a share incentive plan, or a management buy out. Accountants often recommend this route, as they tend to think that people are incentivised by the possibility of a capital event – such as the sale of the business.
My experience is that this is changing. Sharing in this year’s profit and a better work/life balance tends to much more of interest than working on a promise that one day the company might be sold some years down the line.
Motivation in an EOT business
Many owners think that higher salaries will result in better workers. They will typically therefore approach a transition to employee ownership in the same way. The Hays report suggests that this is also changing.
In my experience, the profit share is not the most important thing employees love about employee ownership.
What employees really value is the opportunity to get involved in the running of the business. This can be huge beneficial for everyone, if handled in the right way.
Some employees might see this as a chance to finally have their own way. This potential power grab is not healthy, which is why we help firms to prepare an engagement plan to ensure the message will be heard in the right way, at the right time, by the team. It also ensures that any potentially harmful politicking can be nipped in the bud.
The term that we use to encourage a positive response is that the employees must have a voice in the business.
At this point, most business owners I speak to tell me this is already present in their company; that their employees are already empowered, engaged and listened to. I have had the opportunity to test this with a number of businesses over the years, and it has not been true on one single occasion (at least not to the extent that the owner thinks it is).
The simple reason for this is that the employees do not own the business. They therefore know that however much they are listened to, the final decision is going to be made by someone else.
They therefore do not have accountability.
Engendering the employee voice takes time, and should deploy a variety of different approaches and changes.
The focus, however, should be on giving the team a real sense of purpose, both in the business and in their specific roles. This will enable them to see their work as helping them to live a life with meaning and purpose.
FOOTNOTE: *My thanks to Jonathan O’Shea of The Alternative Board for his post on LinkedIn which brought the survey to my attention.