Motivating force

In the war for talent, managers have to keep an even closer eye on staff morale and motivation. Here we look at how four organisations view the subject and what measures they take to monitor and improve levels in their workforce. By Peter Fargus

An organisation may be resized, delayered and re-engineered, but its competitive edge always relies upon the competency and creativity of its people ñ that and their motivation to apply themselves in support of their organisation’s goals.

It is because of this critical competitive edge that leading organisations are looking to confirm and measure key influences on motivation which affect people’s performance. By establishing reliable measures they put themselves in the position of being able to monitor the effects of improvement action within their organisations.

Experience shows that motivating people on a continuous basis is not easy in this rapidly changing world. Some of the factors that managers in one multinational oil company sees as influencing the way it needs to motivate people are:

  • More complex problems that require better cooperation between teams

  • Greater emphasis on respecting individual differences

  • More pressure to achieve difficult objectives on time

  • Better educated employees

  • Higher standards of living which bring higher expectations

  • Demand for flexible working patterns

  • Medical advances that enable people to work productively to a greater age

  • The availability of communication technology which is resulting in increased understanding of what is happening worldwide

  • New levels of political democracy and transparency worldwide

  • The growing tendency of businesses to face reorganisation.

Because of these changing circumstances it is becoming more important to ensure senior managers regularly monitor the motivation within organisations and take the necessary action to nurture it.

Improving your business through your people

The actions taken by such leading companies provide valuable guidelines on what needs to be done to augment the traditional measures of motivation, such as days lost through strikes, sickness and accidents.

These still have their place, but the emphasis now is towards:

  • Finding out what issues are current in the minds of employees

  • Creating instruments which provide a measure of opinion

  • Using instruments to track motivation

  • Taking action as a result of their findings

  • Linking the actions with the annual planning cycle

But does this emphasis on involving people in identifying organisation problems and initiating improvement activities really work?

Intuitively it seems right, and it would be unusual for commercially oriented business organisations to invest so much time and effort into measuring motivation if they do not believe a tangible business benefit will emerge. But is there any real proof that it works?

Although it is difficult to establish research that, in effect, isolates the “people factor” from all the others that affect business performance, the Sheffield Effectiveness Programme, the Institute for Employment Studies (IES) research and the Imada Loss Prevention Programme provide strong pointers.

The Sheffield Effectiveness Programme

This found people management practices had the greatest effect on productivity and profitability. Work carried out jointly by the Institute of Work Psychology (University of Sheffield) and the Centre for Economic Performance (London School of Economics) over the past 10 years points strongly to a causal linkage between employee motivation and business profitably/productivity.

The study made every effort to compare similar organisations and was rigorously designed to isolate the impact of people on business performance. It concluded that, when comparing five commonly used managerial practices, one stood out as accounting for the largest variation in business performance.

The researchers calculated the change in company productivity and profitability accounted for by the use of business strategy, emphasis on quality, use of advanced manufacturing technology, use of research and development and people management. The results indicated very different percentage variations associated with each activity.

It can be seen that people management practices have by far the greatest impact on productivity and profitability.

The researchers concluded that senior managers should monitor the satisfaction and commitment of employees on a regular basis using standardised surveys, and organisational changes should be made as necessary to promote job satisfaction and employee commitment.

The Institute for Employment Studies

Research found better people management increased productivity and sales. The IES has carried out two pieces of research which support the proposition that a motivated workforce affects business results. The first research, commissioned by Focus Central London, looked at the impact of implementing Investors in People within central London.

The second looked at the impact of employee commitment on retail sales.

Investors in People is a government-backed business standard which helps organisations harness their employees towards meeting business goals. In the past it has been focused primarily on training, but the new standard (introduced last April) is more broadly based, and early indications suggest it will be even more successful than earlier versions.

As shown in panel below, the research indicates a link between the implementation of the standard, better people management practices and increased productivity and customer satisfaction.

The researchers also found that the more an organisation had to do to achieve the standard, the greater the reported positive effect on business performance.

From People to Profits follows the IES’ research into the relationship between employee commitment and retail sales in a major retailer. The researchers correlated measures of employee loyalty, pride and sense of ownership with sales performance data collected over two years. The results indicated a link between employee commitment and changes in sales.

Imada Loss-Prevention Programme

The Imada programme cut costs by 30 per cent and provides another example of how involving people in solving a business problem can affect the bottom line. In this case work carried out in the transportation division of a US-based multinational petroleum manufacturing organisation focused on the cost of lost days due to injury.

Over a 12-month period, the (already poor) industrial injury frequency had doubled and lost work days quadrupled. The organisation’s management decided to examine the issues in the context of the way the organisation operated as a whole.

By carrying out an organisation assessment and subsequently helping to harness the interests and abilities of staff, management succeeded in reducing lost working days from 1,368 to 42 a year within five years and cutting delivery costs from 2.3 cents to 1.62 cents a gallon over 10 years. This latter figure represents a 30 per cent cost saving per gallon of over 2.2 billion gallons a year.

Some of the management practices Imada recommended for improvement are:

  • Increased control by employees over their work

  • Employee participation in the recruitment and selection process

  • Staff involvement in workplace and equipment design

  • Changes to the purchasing of equipment

  • Use of experienced employees as trainers

  • Better information sharing and feedback

  • Improved communication between teams

  • Additional non-technical skills training

  • Use of focused performance measures

Most are related to good management of people. A summary of the resulting changes is given below. These three pieces of work do not necessarily provide conclusive evidence of the linkage between employee motivation and business results. Other research projects have failed to identify a correlation. There is enough to support the view that investing in good HR management practices can generate significant benefits ñ but organisations cannot afford to make a half-hearted attempt on this front.

Case study 1


In order to become the dominant consulting firm in the world, one of PricewaterhouseCoopers’ strategic objectives is to become the “employer of choice”.

The firm aims to attract the best candidates from all walks of life and retain them long enough to develop their potential to the maximum.

This is not an altruistic approach. PricewaterhouseCoopers’ global clients expect the best, and if the best is not available, they will look elsewhere. Consequently the ability to attract and retain top-quality consultants is critical to the maintenance of a top-quality client base.

Furthermore, high staff turnover impacts significantly on the bottom line. PricewaterhouseCoopers estimates that the cost of employing a new member of staff is between 160 to 180 per cent of salary. Consequently, in a global professional services firm, a relatively small improvement in staff retention reduces the cost of staffing by millions of dollars.

For this reason, senior partners have invested significant amounts of time in defining the way the firm should do business. Their deliberations have been aimed at surfacing deeply-felt business principles that appeal to experienced consultants and top graduates alike.

As part of its people strategy, PwC designed a measuring instrument called People Survey, aimed at providing staff with a “voice at the table”. It emphasises the business principles of PwC’s consultancy division, MCS, and also enables all staff to regularly highlight where things are going right and where they need to be improved.

Case study 2


The goal of BT’s Multinational Sales and Services was to be the most successful service company meeting the communication needs of global customers. To achieve this, it relies on the outstanding commitment and motivation of all MNS&S employees and on being able to attract and retain talented people with scarce skills. For this reason it ran a programme of initiatives called “A Great Place To Work” in which:

  • Professional expertise is valued

  • Learning is encouraged

  • Everyone is able to give their best

  • Employees share and build on each other’s ideas

  • People look forward to coming to work.

To the senior management team, “a great place to work” meant developing an environment where self-motivation could take root and flourish. In order to build on previous initiatives, the team created an instrument that would measure how people felt and where resources needed to be focused in the future.

The team supplemented the regular BT surveys with an instrument that specifically measured the characteristics of the Great Place to Work programme. The resulting questionnaire helped identify what activities needed to be put in place to make the initiative successful and how those activities should be implemented.

Case study 3


Airtours wants to be the UK’s preferred holiday company by leading the way in quality, value and service. Its people are vital to this success, none more so than those with customer-facing roles throughout the world.

The demands of today’s holidaymakers require motivated people who take the initiative and work well as a team.

Airtours created a measuring instrument to solicit staff’s views on those actions that affected its customers positively, what could be improved and how people felt about working for the company. It is one activity aimed at enabling its employees to make a difference.

Case study 4


Elida Fabergé, a wholly owned subsidiary of Unilever, is the largest producer of branded health and beauty products in the UK. The company has always aimed to satisfy the needs of customers (retail outlets) and consumers (users of its products) better than its competitors.

It chose the business excellence model promoted by the European Foundation for Quality Management (EFQM) and the British Quality Foundation (BQF).

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This is an edited extract of Measuring and Improving Employee Motivation by Peter Fargus and published by Financial Times/Prentice Hall, an imprint of Pearson Education, £75. You can order it at at 15 per cent discount

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