Why your staff don’t necessarily need a pay rise to stay motivated
The following story (names changed) is not unique. It is applicable across many businesses in Kenya. Do you recognise yourself in it?
Maria had a spare parts shop ideally located around a garage area and close to a central matatu stage where many drivers stop to repair their vehicles. Maria herself was rarely at the shop because she focused on her main activity: tenders to supply car spare parts in large quantities to the state institutions. A sales employee Jacinta led the shop doing purchasing, acquiring customers and negotiating the price. No price list was fixed and the prices were set on the spot judging by what a customer could afford, supposedly in the best interests of the company. Jacinta was also entrusted with some of the most crucial elements of tendering, like preparing the documents and sourcing the parts. The shop itself was highly unprofitable. But Maria still kept the shop, despite its unprofitability, because it was a formal condition to satisfy the tender requirements.
Maria was constantly complaining about her inability to find the right sales person. Jacinta was neither particularly knowledgeable nor overly interested in cars. David who used to work for Maria before had been really passionate about it but had quit after a year and opened his own spare parts’ shop in close vicinity.
In fact, the total profit made by David working for Maria was significantly higher than the profit he is generating in his own company: shop rent as well as financing costs were much lower and he had much more time to do what he is best at doing — interacting with clients and making sales. On the other hand, without David, Maria, instead of having extra profits, must now cover considerable shop costs from other business activities.
For any relationship to be sustainable it must be win-win. Maria’s relationship with Jacinta was rather win–lose in Jacinta’s favour. She (Jacinta) being less capable, ended up stealing from the loss-making shop. In contrast, David being passionate achiever, felt the relationship was win–lose in the company’s favour and decided to take the risks and costs of making himself independent.
Your relationship with employees should be complementary. Employees’ capabilities should bring them better results within the eco-system you create for them as entrepreneur than they would achieve on their own. This eco-system encompasses many factors: Access to resources; Company structures and; Security provided by the salary. It should be more beneficial for the employees to work for you than to set up their own companies.
Focusing solely on monetary compensation is a common fallacy amongst employers. They quite often forget that money, although necessary, is by far not the biggest motivator. Or rather, it is not a motivator at all; it must be there in sufficient quantity to cover the living costs, but it is not money that makes people achieve extraordinary results. Take yourself as an example. “Entrepreneurs are rarely motivated by the financial gain and most are never fully compensated for the time, risk, effort, and capital that they pour into their venture.”
At ISBI we give you valuable insights into the human psychology that you as entrepreneur need in order to lead your people effectively. To quote Richard Branson “Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”
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