Motivation - what is it and why does it matter?

Motivation, what is it and why does it matter?

How does Jacy Cunningham get up every morning so excited to help me with my squats? How does Gary Vee create yet another business so quickly after the last? How can Elon Musk do so much when I struggle to even make coffee some mornings? The answer is all related to motivation.

Motivation is an obscure concept which researchers have wrestled with for decades, but generally relates to the process we all use to account for the intensity, direction, and persistence of effort we administer towards attaining a certain goal. Me deciding whether to workout this morning involved the process of motivation. I had the right direction (wanting to get fit) but lacked the persistence and intensity to follow through with it (which basically means…. I didn't work out). This is a result of poor motivation for working out, something that will be familiar with some but not all of those reading this article.

Whether it's personal reasons or not, it's obvious that motivation is a key element when thinking of teams and organisations. Highly motivated staff creates high performance teams, resulting in greater success of the team and organisation. This is particularly important within start-ups, where creating highly motivated teams can be a way of attaining and maintaining a sustained competitive advantage over your competitors. Therefore motivation of your team in start-ups is an incredibly valuable tool every founder should not overlook, and in terms of maximising value, it could be one of the best things you could do as a leader.

How to maximise motivation in your team?

As indicated before, motivation is a topic that researchers are still trying to understand today, but there are some generally well accepted concepts and frameworks that are tried and tested ways to maximise motivation. First is realising there are two forms of motivation, intrinsic and extrinsic. Intrinsic motivation relates to internal factors such as being motivated to work because you enjoy it, because you believe in the mission, or because you enjoy working in your team. These factors are often attributed to things such as culture and purpose.

Extrinsic motivation is based more upon external factors, predominantly around receiving rewards in returns for actions, such as salaries and bonuses.

Start-ups are inherently strong in intrinsic motivation, but poor in extrinsic motivation. Start-ups are often mission led with employees having a high degree of autonomy and social interaction. I am sure you have heard many start-ups employees or founders talking about their company as though they are family, sometimes painfully so. If only families actually worked like some of these companies do! Extrinsic motivation is around benefits received for actions. Start-ups generally struggle with this, because you can generally not pay at (or above) market rate salaries, nor high bonuses, simply because you’re likely running off investor money which makes you more cash conscious. Therefore this makes most start-ups rely heavily on intrinsic techniques. But there is only so long this lasts, as you have no doubt felt yourself when you look at John with his new car he bought with his bonus….sure we are saving the world with our new technology, but why does John get all the treats! Maybe I should become an investment banker…

The best extrinsic motivation tool (with an intrinsic kicker!)

One great tool either overlooked or not given the appropriate weighting is employee equity. Employee equity programs offer the ability for employees to own a slice of the pie, so to speak. This is great for start-ups as they are often cash poor, but equity rich. It is a great way to offer an extrinsic reward (as equity does have a monetary value) without giving away cash (such as a salary). Plus it also comes with an intrinsic kicker - employees feel more involved with the business. Just like having a bet on a basketball game outcome makes you more involved in the game (not that I am condoning betting….) having skin in the game can be a major motivator, and therefore a good tool for creating highly motivating teams.

Sounds like a great tool right? But as with everything in life, nothing comes for free. Although on the face of it it can look easy, employee equity programs can be complex. What type of equity is best? How much should I give? Do I just give it to the employees and expect them to understand? Are there tax implications? All these questions need to be answered, and require an expertise that is not common in start-ups. Big companies outsource this to their HR department, but when was the last time you heard of an HR department in a seed-stage company? This results in many employee equity programs being pulled together quickly and without much experience or guidance, resulting in poor motivation outcomes. Our research has shown employee satisfaction with equity programs is far less than what founders thought, which is a shame because it could be such a powerful motivation technique.

At Pomelo we take the hassle out of employee equity programs. We have an employee centric focus, aiming to maximise motivation and freeing up founders time to focus on growing their businesses. We are the experts when it comes to motivation in early stage start-ups - so come talk to us if you want to maximise motivation with your equity programme.

References

Craig C. Pinder (2008) Work motivation in organizational behavior / Craig C. Pinder. 2nd ed. New York ; Hove: Psychology.

Robbins, S. P. (2016) Organizational behavior. Pearson Education.