Internal motivation of employees. When to raise the salary in IT business?
Employee’s paradise in one moment can turn into the CEO’s hell. One such moment is a day of the salary raise. How to manage an IT company motivating employees and saving the balance in P&L?

An illustration was designed at TheRoom design boutique by Alexandra Marchenko

According to Julian Birkinshow’s course for London business school, there are 2 types of management: traditional and innovative. Talking about IT business, traditional management appears being no longer effective (for 5 years already). Neither bureaucracy nor hierarchy and linear alignment make work easier. But what shall we do with the fourth bases of the traditional approach — external (financial) motivation?

Internal motivation of employees

A type of motivation, based on the primary interest to the work, self-development and skills improvement. Internal motivation can come only from the employee and can be increased via gathering new knowledge, getting a name and authority in the sphere of work. Is related to the innovative approach in management.

External motivation

A type of motivation, based on the creation of the employee’s interest in the work via the praise from the office managers and CEO in a form of financial prize, additional weekend or vacation. It can come only from the company’s administration and is related to the traditional management approach.

A presentation of Julian Birkinshow

There is plenty of motivation factors for designers, developers, and sales managers. All of them depend on humans and society.

That’s why good managers look for the employees, interested in personal growth and development, not in the salary.

Enthusiasm and a willingness to grow in the sphere you’re occupied at — a direct counterweight to the financial motivation of employees.

There’s still a risk, for example:

if a young genius, who is a great enthusiast and the perfect developer gets to your company and you put him on the project he is not interested in at all for a year or so, and keep on increasing a salary once per 4 months, he will lose all of his enthusiasm with time. He will be completing all of the projects normally and come to the office on time. But from the creative genius, he’ll turn into another “plankton”.

No matter how it seems, that happiness is made of gold and career stairs are made of dollar bills, for the CEO of the company these stairs can become a scaffold one day. Let’s check out some more examples of how working with enthusiast volunteer companies were getting a perfect result.

Example #1

Costa Coffee. Less than in a year, Costa created a coffee machine of the third generation. They simply asked a third-party company to create something for them without any payment and contract. That company was so interested in cooperation with Costa, that it created an innovative product for an extremely short time.

Example #2

Topcoder. This is a company without developers. Every project turns into a lot on the auction, that is played between different teams of developers. The one, who presents the best result gets a payment. Every time the company gets more and more high-quality solutions.

Presentation of Julian Birkinshow

Money is not an engine for good work. Marx and Engels mentioned a capitalist issue from the point of the human alienation from the product of his work. Working on the smart enterprise, people started losing satisfaction from the product of their work. This led to the idea of the power of financial motivation and it became the most popular motivation type for decades.

But the thing is a traditional model turned being outdated in 1975.

Right after the creation of IT segment new motivating factors became way more effective, than the same old banknotes.

fame: working on the product, designer or developer should get his doze of popularity. A good manager will at least tell about the progress of the designer (developer) in the company and also pay one post in social networks to this achievement.

working on the product, designer or developer should get his doze of popularity. A good manager will at least tell about the progress of the designer (developer) in the company and also pay one post in social networks to this achievement. a voice: let designers and developers form teams for the projects, choose projects and vote for those they want to work at. Give more power to your employees or create an illusion of it and they will work better. First of all, “they’ve chosen a project themselves”. Secondly, “they formed a team themselves”. Thirdly, all decisions were made by the team autonomously and a measure of responsibility grew up.

Is it a good idea to use only a conception of internal motivation?

Many companies have already removed job positions and work schedules, allowing employees to choose projects and work hours themselves. But does it always work? No. Working with the internal motivation it’s important to look at the psycho-emotional state of employees and social climate in the collective. Once you hire a person, not motivated enough or the one with the “creative crises” — it will affect the whole team. As usual, companies look for a balance between internal and external motivation.

To find this balance:

make the salary of every employee a taboo theme .

. discuss all the conditions: at the very beginning of the cooperation, set a deadline for the salary revision. For example, once per 4 months you will be discussing achievements with the employee and make a decision based on his (her) success.

at the very beginning of the cooperation, set a deadline for the salary revision. For example, once per 4 months you will be discussing achievements with the employee and make a decision based on his (her) success. remove KPI — at the end of every month make notes about the achievements of each employee.

— at the end of every month make notes about the achievements of each employee. run inner company’s projects and let employees form teams on these projects, handing the whole workflow and project themselves.

on these projects, handing the whole workflow and project themselves. be attentive to the real success — if an employee comes to the workplace on time it’s not enough reason for the salary raise. A salary raise is an additional promotion, but not the main goal of your cooperation.

How much should an employee’s salary be raised?

The fact that every employee has a different payment is okay. Everyone just can’t work on the same level, which means people should get money depending on their level of skills. Otherwise, a system of junior, middle and senior specialists will make no sense at all.

While hiring, you offer a salary to the specialist. It should respond to your expectations about the skills of the employee. The development of these skills takes no longer, then 4 months. That’s why we consider this period to be optimal for the revision of the salary.

However, this period can’t remain the same. Not to develop a Pavlov’s dog reflex, review salaries in different periods — something earlier or later. It will allow you saving “an effect of surprise” and a willingness to get a reward for the good work. Don’t raise salaries that often — otherwise you’ll kill internal employee’s motivation.

A good manager rises an employee before a specialist will even ask.

To make money be a surprise, but not the only reason to work, it’s important to outstrip a moment when your employee will ask to raise him. Notice cool achievements. If your specialist won a competition (related to the job sphere) or brought a big client to the company — raise him before the “deadline” comes.

How much should you add to the salary is a difficult topic. Some people prefer to raise salaries on the fixed-price bases. It usually works with designers and developers.

When we talk about those, who work with clients directly, it’s better to raise such specialists on a certain percent from the salary. To define this percent — make an analogy between the cashflow of the company and employee’s income and compare these numbers with the moment a contract between you two was signed. Depending on the stats changes you may find a needed percent and raise a salary.

Which management model to choose and when to raise a salary is a personal choice of every manager. Sometimes it seems, that money can make specialists more loyal. However, if there is no interest in the work from the very beginning, the money will only become another useless waste of the company’s budget.
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