Material incentive for staff is a way to achieve the company's goals. Why financial motivation doesn't work well

There is no doubt that proper motivation of personnel by an HR manager is the key successful work employees of the organization. However, exactly how to motivate people is not always clear. Money is important! Money is one of the most important factors in motivating staff, and this article is dedicated to this topic.

An HR manager must remember the main thing - money is important!

On the one hand, this is obvious. On the other hand, that this is not at all true, remember at least Maslow’s concept of the pyramid of personal needs.

If Maslow's theory were completely correct, then, at least in rich countries, economic incentives should have already lost all their force. As we know, this is not the case.

According to Peter Drucker (1974), there is not a single piece of evidence to support the abolition of material rewards. Antimaterialism is a myth, despite the fact that so much is said about it. Economic incentives are becoming a much more effective motivation than simply remunerating staff.

We live in a world of monetary motivation, so an HR manager cannot avoid this question in interaction with employees. None human attitude cannot compensate the employee with monetary reward.

If good human relationships are established in the team, then this will only give the team additional interest in work, which will be an excellent motivation for better work.

Even the most dedicated footballers won't think of playing for England unless they get paid. The financial rewards that clubs offer them are far greater than those in their own country. Rugby players no longer play for their own countries, but rather choose the highest bidder. Professional tennis players refused to play at Wimbledon because the rewards were not attractive to them.

All this is typical for our world, and you, as an HR manager, must definitely take this into account. Struggle for better salary, and the awards are indeed still happening. All this happens all the time, despite the demand of psychologists that safety is the main human need.

Do values ​​really not change over time? However, despite all the philosophical speculation, we must consider the realities of life in the commercial world.

Self-motivation may not last long: it must be constantly reinforced by rewards. In particular, merit should be assessed and rewarded regularly if it deserves it.

What determines an employee’s financial remuneration?

Financial rewards are divided into three types:

• for additional profit;
• behind Good work;
• for merit.

For profit

Profit can be assessed at macro and micro levels. This is determined by what type of activity the company is engaged in and what products it produces.

On a macro level, it would be difficult to identify and reward outstanding performance.

This is possible at the micro level, where you can consider the cost of work and the profit margin in more detail. This is easier said than done because it also takes into account overhead and other general services, which reduces the objectivity of the individual employee's evaluation. The distribution of cost in such cases is somewhat arbitrary, so the profit will not be a true reflection of the work.

For good work

In the case of assessing the quality of work, the various constituent factors must be separated from each other, evaluated and compared. The HR manager can assign an assessment to each factor by prior agreement with the company management.

The overall rating of work factors forms the employee’s salary structure. However, there must be a so-called “baseline or level”, a “minimum wage", which depend on operating conditions and geographical location. In some cases and in some countries these indicators are set by law.

We can talk about the following factors:

• production conditions;
• physical features;
• mental characteristics;
• degree of responsibility;
• education and experience.

If these are managers, then they must have:

• responsibility;
• experience;
• ability to build relationships with people.

The HR manager will be helped to assess the mental, professional, and physical characteristics of an employee. psychological tests. Such psychological techniques on attention are very effective and are based on a solid basis of scientifically based theories of attention.

For example, an analogue of the Ioseliani test is used to assess the switchability of intellectual attention.

Stroop test - to assess the intensity and selectivity of attention. It can also be used to train the intensity and selectivity of attention.

Amthauer IQ tests are necessary for diagnosing intelligence structure and determining intelligence quotient (IQ).

The Guilford psychological test allows you to explore social intelligence, necessary for “person-to-person” professions, to predict the success of an employee’s activities.

For merit

An employee's merit rating is used as an indicator of performance. Each employee is generally rated as excellent, good, average, or poor in the following abilities:

• communication skills;
• human relationships, including leadership and motivation;
• knowledge;
• judgments;
• mental capacity.

I would like to advise the HR manager to take assessment more seriously, since sometimes, unfortunately, it is carried out simply mechanically, which leads to bias in relation to employees.

In the last article, I wrote about the higher meaning of money management as a path to greater control over own life, and as a result - to more high level happiness.

Today I would like to touch on a more applied aspect of financial management - setting goals, or formulating why financial planning exactly what you need.

Correctly set goals are extremely important - a motivation system created on their basis will help you more easily get through the stage of getting used to recording income and expenses, and will also allow you to rationalize, and therefore improve, the feelings associated with the necessary control of your expenses. Our goal ultimately is for financial management to be not a painful, unpleasant exercise, but a conscious action aimed at achieving goals that you clearly understand, thus an enjoyable activity. I achieved this, like many others successful people– and there’s no reason why you can’t improve your life through financial planning, and have fun doing it too.

Let's look at the main motives that are usually cited as reasons for introducing a personal finance management system into your life.

1. “I want to spend less” . It happens that you think that the money is going to no one knows where, and you decide: you should spend less. A month or two passes, and they keep leaving and leaving. And it seems like you don’t need anything specific, but there is a feeling that you are living beyond your means, and you should be more modest.

This situation is quite complex from a motivational point of view, because you do not have a direct need to deal with your finances, but there is only a general feeling that this approach is correct. This can be compared with the health of a person between the ages of 20 and 30, when immediate action is not yet needed, but based on indirect signs it becomes clear that life gradually needs to change.

The good news is that you are on the right track. I'd venture to guess that the main reason you don't understand why you need to spend less is because you don't have a connection between your financial decisions today and your standard of living in twenty, thirty, or forty years. This is absolutely normal. In the future, we will analyze the typical spending structure of a person aged 20 to 80, and you will be able to make sure that even small savings made before the inevitable large expenses will help you more easily go through difficult stages of life, avoid getting into unprofitable debts with high interest rates and ultimately lead a more prosperous life.

2. “We need to pay off debts” . For many of us, at a certain stage in our lives, a situation comes when borrowing a sufficiently large amount of money seems to be a simple and effective way out of a certain situation (by “large enough” I mean an amount exceeding your monthly income). At this moment it seems that there is no problem - as I took, I will give back, because I earn money. After a couple of months, you usually realize an amazing and very simple fact: it doesn’t work out. Well, it doesn’t work out, that’s all. And you seem to make money, but you always need something, all the time it goes somewhere. And it’s impossible to allocate these unfortunate people thousands of rubles. Sound familiar? If yes, then I will tell you that you are not alone, this is a fairly common situation. It is very difficult to give away money, especially if you have to a large sum– giving it away little by little seems inconvenient, giving it away in full and quickly means there’s not enough money, and saving up to give it away in full means there’s not enough system.

IN modern world with the development of credit cards, this situation has become even more aggravated - after all, the person from whom you borrowed at least sometimes reminds you that the money needs to be returned, and the bank - after all, it is precisely in his interest that the volume of your debt does not decrease, provided that you good borrower and pay interest regularly.

Both of these situations can be solved; in the future I will describe strategies for overcoming the debt crisis, and how a personal finance management system should be configured to solve these problems.

3. “We need to save up for...” Congratulations, you are in a great situation, you have a clear goal that you can easily visualize. However, if you are reading this article, most likely you have some kind of problem (and if you don’t, then congratulations, you can be happy for you!).

I'm guessing that you might be worried about the following: number one: you can't start saving. Second: you save, but this money is spent on some other purpose (“urgently needed”). Third: you save, but the accumulated amount very slowly brings you closer to your goal.

Here I must give fair warning that creating a system financial management- not a silver bullet. If you receive thirty thousand rubles, and want to save up for a new S-Class Mercedes, then your goal is most likely unattainable, and, most likely, destructive for your budget - even if you manage to save up for the desired purchase, the maintenance of this car will eat up all your income. Therefore, this dream is destined to remain a dream, at least until you start earning more.

If your goals are more realistic, but you still have problems, then planning and financial discipline will undoubtedly help you. I will also try to tell you how to make the accumulation process as painless as possible (and preferably fun).

The three reasons that I gave above were the most common in my practice, so I am quite familiar with them and how to adapt own system financial management to achieve them.

But I would really like to hear, especially from those who have read this far (thank you very much, oh, a small handful of truly motivated readers!) - why do you personally need a financial management system? I will be very grateful to you.

Send your good work in the knowledge base is simple. Use the form below

Students, graduate students, young scientists who use the knowledge base in their studies and work will be very grateful to you.

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The fundamental purpose of managing any commercial enterprise is to maximize the welfare of its owners. The increase in the owner's wealth consists of an increase in the market value of the capital invested by him in the company and income received from the distribution of profits. Investor investing cash in a particular business, expects a certain level of profitability from its investments, set depending on the price of the possible use of the invested capital in another business project with a similar level of risk. If the investor's total income (growth in the market value of invested capital and income received from profit distribution) exceeds the required level, the company creates added value for its owners. Otherwise the value is destroyed.

The idea is very clear at the level of an enterprise directly managed by the owner. However, when delegating management functions to hired management, the principle of maximizing the welfare of owners loses its transparency, and the implementation of this target is associated with certain problems.

IN modern conditions owners do not actually exercise control over the activities of corporations. Limited information in the form of accounting reports and official press releases and the lack of clear procedures for assessing the performance of companies make it difficult for owners to control the use of their capital. On the other hand, company managers are often not interested in increasing the welfare of shareholders, pursuing personal goals, including due to the lack of specific benchmarks for the effectiveness of their work and adequate motivation in achieving given benchmarks.

Resolving the contradictions present in the practice of corporate governance has two components: 1) improving systems for assessing the effectiveness of an enterprise’s activities and information exchange between its management and the investment community; 2) formation of an adequate system of motivation and control of management to achieve a balance of interests of managers and owners.

This article discusses one of the options for creating a viable management motivation system based on the economic value added (EVA) indicator, which is established as the determining criterion for the company’s performance.

Formation financial basis motivation systems for company management should be aimed at achieving four main goals:

Balancing the interests of managers and shareholders. The amount of remuneration earned by managers should depend on changes in the wealth of the company's owners. At the same time, special attention is paid to achieving a balance of interests in the long term in order to avoid situations where managers, in order to obtain higher rewards, activate current shareholder returns to the detriment of the company's future growth. The implementation of the principle of alignment of interests consists in correctly defining the criteria for the successful work of managers and providing them with incentives to implement strategies and make investments aimed at maximizing the value of the enterprise.

Sufficient motivation. The incentives that encourage managers to make efforts to increase the welfare of the company's owners (including working harder, taking risks, making unpopular decisions, etc.) must be strong enough.

Limiting the risk of managerial dismissals. Establishing a direct dependence of managers' remuneration on changes in the welfare of shareholders carries a high risk of dismissals, since a decrease in work efficiency in the short term under the influence of unfavorable macroeconomic factors may lead to the departure of managers from the company. This is because managers are less risk averse than shareholders. Investors are willing to accept a certain amount of risk in exchange for demanding an appropriate level of return when purchasing a company's shares, since they can reduce their overall risk by diversifying their investments. Managers invest their human capital(i.e. experience, knowledge, talent) into the only company they work for and have no opportunities to diversify. Therefore, bonus schemes for management personnel should be built taking into account limiting the risk of managers not receiving remuneration to a level at which the likelihood of them leaving the company under the influence of unfavorable external factors low.

Economical. The purpose of creating a bonus system for managers, aimed at increasing the efficiency of the corporations they manage, is to maximize shareholder value, and not the total wealth of shareholders and managers. Therefore, the amount of remuneration earned by managers must be acceptable from the point of view of the company's owners. The proportions of value distribution between shareholders and management are established depending on a number of parameters: the degree of risk that managers are willing to take on, the contribution of various production factors (capital and labor) to value creation, etc.

One of popular instruments increasing the interest of managers in maximizing the welfare of shareholders is their stimulation through the provision of grants of shares and/or options for the company's shares. However, such bonus schemes have a limited scope. They are mainly used as part of the motivation system for top management of corporations, and are not very common at the level of business units due to the weak relationship between the performance of divisional managers and the market value of shares. In addition, not every company is able to incentivize its managers with significant grants of shares or stock options.

In general, it is not always possible to link the amount of remuneration received by a manager to the market value of the company's shares. Therefore, in most bonus schemes currently in use, the manager's remuneration is usually set depending on the chosen assessment of the achieved level of company performance.

The standard remuneration system (or bonus plan) has three main parameters: 1) the planned level of performance, for achieving which the target amount of remuneration is paid; 2) the minimum level of performance that must be achieved before bonuses begin to be paid (lower limit); 3) the level of efficiency at which the amount of remuneration paid becomes the maximum possible (upper limit).

Thus, managers' bonuses depend on performance only within a specified performance interval. In foreign practice, the “80 - 120” scheme has become widespread, in which for achieving a minimum level of efficiency of 80% of the planned level, 50% of the target bonus is paid, and with an efficiency level of 120% of the planned level, a maximum remuneration equal to 150% of the target bonus is paid. Further increases in the company's operating efficiency (over 120% of the planned level) do not affect the amount of remuneration paid to managers.

motivation management financial bonuses

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KPIs for the finance department are often tied to the company's financial results. Our interlocutor today is sure that this is not always justified. It is necessary to motivate employees on indicators that they can influence. Read about other financial department motivation mistakes in our interview.

Evgeniy, please tell us about the financial department’s motivation system. Which employees does it apply to?

Motivating financial department employees is not an easy task, since it is not always possible to correctly calculate an employee’s contribution to the overall result of the company. For myself, I identified several groups of workers, whose contribution I digitized into the indicators, since I consider their influence on the efficiency of the system to be significant. The key factors that directly affect the financial results in my company are: the speed of document flow and the availability of working capital. Accordingly, the main groups of managers and ways to motivate them were identified:

1. Document management specialists are motivated by the timing of package processing, the number of processed packages of documents and the number of payment delays due to poor quality preparation.
2. Financial Manager, the person responsible for working with banks is motivated by the volume of the attracted loan portfolio, as well as the average interest rate.

- Are the financial departments linked to financial indicators companies?

I am a supporter of motivation systems in which an employee has the opportunity to influence the processes through which he receives motivation. As mentioned above, it is sometimes quite difficult for financial service employees to mathematically calculate the final contribution to the financial result. From my point of view on the company's bottom line, it makes sense to motivate the levels of line managers and above.

- Are there any KPIs that you have abandoned over time, and if so, why?

Currently there are no such KPIs. But most likely precisely because we carefully study each indicator that we plan to use. And if there are doubts about its effectiveness or expediency, then such a system is not used.

- What mistakes do companies most often make when developing a motivation system for the financial service?

I would highlight a few regular key mistakes:

1. Choosing an object of motivation. As I already said, an employee’s motivation should stem from those processes that he is able to influence. I admit the presence of general corporate elements (the company receiving a certain level of income at which everyone is motivated). But this has nothing to do with personal motivation programs, in which such elements should not exceed 5%.
2. Error in determining the goals of the subject of motivation. Quite often we hear from managers different levels complaints that subordinates do not share their non-financial motivation. They don’t “cheer” for work, etc. I politely recommend to such leaders that they remember the wonderful Maslow's pyramid and think: are they on the same level as those they motivate and whether their motivation systems should coincide.
3. Error in determining the amount of motivation. General rule states: if in order to fulfill the conditions of motivation an employee needs to apply the maximum amount of labor, then the amount of remuneration must be significant for him. Otherwise, either the employee will internally agree to less income and you will lose efficiency, or he will look for another job, which also leads to losses for the company.

- What to do financial director, if the system of motivation of its employees does not work?

There is no simple answer to this question. Look for the reason. Start with yourself. From the typical errors described above ( most of problems is here). If you did everything correctly, then change the employee. You can motivate anyone, but not everyone should be motivated. Decide on the importance of the employee for the system and make a decision: adjust the system to suit specific person or look for a replacement.

- How do you motivate yourself?

My motivation is pretty simple. I am a co-founder of a company and my results depend on how efficiently I work. I clearly understand how much unresolved or deferred tasks cost me.

Know that people don't work just for money. And if you are trying to motivate people only in this way, it is not the most effective tool.

Any manager always dreams of organizing the work of his employees in such a way that they strive to achieve highest results so that the business develops by leaps and bounds, and profits grow by leaps and bounds. In order for these dreams to come true, motivation is necessary - some kind of internal attitude towards productive work.

However, most employees, as a rule, do not have such motivation - or rather, they themselves do not know it. And here it is very important to find the right approach to people - to each individual. Motivation can be financial and non-financial, and both the first and the second play a huge role at the same time.

Most managers believe that financial motivation is the incentive for employee development and professional growth, but in most cases this is secondary.

Material motivation will work effectively only as long as you have enough money. Costs will be directly proportional to results. At the same time, financial motivation is not only a decent salary, it is too many factors related to the self-realization of each person for himself in a specific place or area.

Of course, when a specialist comes to work with high earnings, at first he will be happy and work with inspiration, but he quickly gets used to good things, the income will become familiar to him, and he will slow down. Of course, you can fire him and hire someone else, but after a certain period of time the same thing will happen to someone else, and constant staff turnover is unlikely to be part of your plans.

In addition to salary, financial motivation also includes various bonuses and cash allowances. However, for them to work well, employees need to be informed in advance that, for example, if they complete a task in a short time and with high quality, then everyone who took part in its implementation will receive a certain percentage.

But it is necessary to practice this approach not for all projects, but only for the most complex ones. This way you can motivate your team to complete the project quickly and efficiently. Based on the results of completion, be sure to inform the team about the accruals so that they understand exactly for what merit they received their salary and additional remuneration. It is also necessary to warn people and convey in the correct form what was done wrong and why they did not receive additional compensation in each specific case.

Why is financial motivation not the main one today?

• people do not know their real talents and try to live and achieve something “like others” or “successful”;
• Every person has their own specific internal method motivation - for some it is the process itself, for others it is the goal itself, and for others they need recognition or success;
• get to know and guide each employee in the required direction and in the way that he does better than others - this is the biggest stimulating side of the business; people don’t leave such managers;
• knowing and following your internal motivational process is the most important thing in business - and the corresponding payment for this process comes automatically;
• any increase in wages is not always associated with an increase in labor efficiency;
• know that employees will never be happy with everything - that’s how people work;
• money can be a strong motivator only if the employee has a well-structured goal;
• companies have poorly developed indicators of individual performance, so differences in salaries do not reflect differences in the productivity and implementation of each employee;
• The salary level does not always correspond to the market average, therefore, if it is lower, there can be no talk of any motivation;
• one quickly gets used to good things, and in the future a high salary no longer motivates;
• For some employees, the main motivation factor is money, while for others it is something completely different: career, self-realization, respect, status, etc.
• remuneration and financial results are in no way related to each other;
• bonus indicators change so often that employees stop following them, much less fulfilling them;
• the entire system of financial motivation is skewed towards punishment: reward for 5 points, and punishment for 20;
• employees are not explained why he received exactly that much, and he feels deceived;
• Not every company can endlessly increase wages, because financial resources are not always available.

So, it is necessary to analyze the motivation situation in your company and start solving this problem immediately because this problem is costing everyone too much in every sense. After all, the most important thing in management is constantly stimulating others to be active, and this must be done differently and individually each time.