A recent report from the Institute of Fiscal Studies (IFS) found that as a result of the current economic downturn, wages have fallen more in real terms than ever before. The IFS discovered that despite the rising cost of living, a third of workers who stayed in the same job saw a wage cut or freeze between 2010 and 2011, and many UK companies, particularly smaller businesses, have cut wages rather than make staff redundant.
Without a steady increase in salary, it is essential that managers find alternative ways to motivate their staff to ensure employee retention and, ultimately, the success of their business. Pay freezes will have an impact on employee job satisfaction and motivation, and as a result, may lead many companies to lose members of staff. Replacing an employee can have long lasting effects on your business’s profitabilty and productivity, and recruiting their replacement can be a costly and time consuming procedure.
How a pay freeze affects your employees will vary depending on the outlook and priorities of the individual. Each employee is motivated by different things; some are goal-orientated, some need a stable working environment which enables them to maintain the status quo, while others thrive on social interaction and engagement. Pay freezes and pay cuts will affect some members of staff more than others, and it is your responsibility as a manager to identify how you can continue to motivate different members of staff despite the financial limitations. For example, you may find that members of your sales team are driven by monetary incentives and a steady increase in salary, in which case a pay freeze will have a fairly significant impact on their job satisfaction and drive in the workplace. On the other hand, there may be members of your team who consider job security to be their main priority, and will therefore prefer the security of their role to be assured, rather than be in a more unstable position, but with a potential pay rise in the future.
Psychometric assessment is one way to get a valuable insight into each employee’s motivational make-up. By implementing a behavioural assessment such as the Thomas PPA during the recruitment process and lifespan of an employee, employers can generate a profile for each of their employees, which can help them to understand the motivations and drivers of their individual staff members and therefore learn how to manage them more effectively. Once you have determined what motivates an individual, you will need to be creative in developing ways to inspire and motivate them that play to their preferred working style.
Some American companies recommend low-cost techniques to motivate employees such as leaving post-it notes with praise on an employee’s desk or acknowledging a hard-working employee with a standing ovation. We may be slightly more reserved over on this side of the pond, but there are alternative ways to incentivise your staff with minimal cost to your business but maximum impact on their job satisfaction. Offering flexitime or an additional day of annual leave can reduce absenteeism and boost your employee’s drive. Some companies have counteracted the impact of a pay freeze with something as simple as an extra day of leave for an employee’s birthday or taking the team out for lunch.
Of course, some incentives will suit certain employees more than others.
For those members of your team motivated by power and a need to achieve goals, you could challenge them by organising a competition with a small prize for the winner. For individuals who best respond to social interaction, factoring opportunities for positive feedback and verbal praise will keep them engaged and fulfil their need for positive reinforcement. In other cases, employees will rely on job stability to be motivated, so showing strong leadership and reassuring them during times of change will help keep them motivated and happy.
It’s also worth keeping in mind that it’s not only your team members who can benefit from psychometric assessments – they can also help managers develop an awareness of how their own behaviour can be interpreted by their team. Psychometric tools are a great way to facilitate two-way communication between employer and employee, and help SMEs cement better working environments and, ultimately, a more successful business.
Every business understands the importance of staff satisfaction, efficient teams and low staff turnover in these challenging times. It is therefore imperative that you understand how certain economic, social and circumstantial changes can affect each of your employees in different ways. By understanding their individual motivations, strengths and limitations you can implement the best approach to keep your team happy and motivated. 
