9.8 Trends in Employee Motivation
- What initiatives are organizations using today to motivate and retain employees?
This chapter has focused on understanding what motivates people and how employee motivation and satisfaction affect productivity and organizational performance. Organizations can improve performance by investing in people. There are several ways to invest in employees, including: (1) development opportunities through education and training, (2) employee ownership, (3) work-life benefits to help employees outside of the workplace, and (4) nurturing knowledge workers and their increasing significance. All of the companies making Fortune’s annual list of the “100 Best Companies to Work For” know the importance of treating employees right. They all have programs that allow them to invest in their employees through programs such as these and many more. This section discusses each of these trends in motivating employees.
Education and Training
Companies that provide educational and training opportunities for their employees reap the benefits of a more motivated, as well as a more skilled, workforce. Employees who are properly trained in new technologies are more productive and less resistant to job change. Education and training provide additional benefits by increasing employees’ feelings of competence and self-worth. When companies spend money to upgrade employee knowledge and skills, they convey the message “we value you and are committed to your growth and development as an employee.”
Catching the Entrepreneurial Spirit
Everyone’s a CFO
Andrew Levine, chairman of DCI (Development Counsellors International), a New York-based place-marketing and public relations firm, wanted to implement a more open management style at his company, so he added a financial segment to monthly staff meetings, during which he would share results and trends with his employees. Much to his surprise, employees seemed bored. During one staff meeting he asked his employees how to calculate a profit, and only one employee knew how. Levine was astounded, both at his employees’ general deficit in math concepts and at Barrios’ knack for figures. Levine then decided to require employees to present the financial reports themselves.
For the next staff meeting, Levine appointed Barrios the chief financial officer (CFO) of the day. Barrios explained the terminology in ways the average person could understand. Since the changes, employees have become well versed in financial concepts. The employee assigned as "CFO for the day" meets with DCI's actual CFO prior to their scheduled presentation day. In this meeting, they review income, expenses, and other relevant financial information and statements. They discuss the revenue projections and general financial trends. The "CFO of the day" then prepares a presentation to share at the staff meeting. Employees at all levels think the training is beneficial for the company, stating that employees are trained not only in their job position, but also as a business executive. When an employee's turn comes around, they stand before their colleagues and deliver the financial numbers and trends. Employees presenting are encouraged to involve their co-workers in the discussion by asking questions of the audience and collaborating toward a mutual understanding of what the numbers are indicating about the company performance.
“CFO of the day” has definitely been a good thing for DCI, which remains profitable. Employee and customer retention remain high.
Levine has embraced the lessons of open management, or participative management. Participative management practices, such as open-book management, were popularized by Jack Stack and Springfield Remanufacturing Corporation (SRC). Whether the term is CFO for a day, participative or open-book management, or great game of business, the goal is to teach employees about business, thereby engaging them in the business. Companies that embrace these practices believe employees will be more productive if they understand financials and feel like owners. And in the example of DCI, employees are no longer bored during the financial review section of the monthly meeting.
Sources: Peter Carbonara, “Small Business Guide: What Owners Need to Know about Open-Book Management,” Forbes, https://www.forbes.com, accessed January 19, 2018; Peter Carbonara, “Gaming the System: How a Traditional Manufacturer Opened Its Books and Turned Employees into Millionaires,” Forbes, https://www.forbes.com, accessed January 19, 2018; Nadine Heintz, “Everyone’s a CFO,” Inc., https://www.inc.com, accessed January 15, 2018; Bill Fotsch and John Case, “The Business Case for Open-Book Management,” Forbes, https://www.forbes.com, accessed January 19, 2018; Louis Mosca, “The Dangers of Opening Your Books to Employees,” Forbes, https://www.forbes.com, accessed January 19, 2018; "DCI's Team," https://aboutdci.com, accessed February 9, 2026.
- Do you think a CFO-of-the-day program is a good idea for all companies? Why or why not?
- How comfortable would you be leading the financial discussion at a monthly staff meeting? What could you do to improve your skills in this area?
Employee Ownership
A trend that continues in many compensation and benefits plans is employee ownership, most commonly implemented as employee stock ownership plans, or ESOPs. ESOPs are not the same as stock options, however. In an ESOP, employees receive compensation in the form of company stock. Recall that stock options give employees the opportunity to purchase company stock at a set price, even if the market price of the stock increases above that point. Because ESOP employees are compensated with stock, over time they can become the owners of the company, which is attractive because if they leave the company they retain their stock ownership. Behind employee ownership programs is the belief that employees who think like owners are more motivated to take care of customers’ needs, reduce unnecessary expenses, make operations smoother, and stay with the company longer.
According to the National Center for Employee Ownership, there are over 6,000 ESOPs in the United States, with a total of 15 million participants.21 Changes in tax laws can impact ESOPs; however, the amount of stock held by ESOPs in 2023 was over $2.1 trillion and is expected to increase.22 Employee ownership plans continue to be a powerful competitive tool in employee recruitment and retention.23
ESOPs, however, also have drawbacks. The biggest concern is that some employees have so much of their retirement savings tied to their company’s ESOP. If the company’s performance starts to decline, they risk losing a significant portion of their wealth. This is what happened at former grocery store chain Piggly Wiggly Carolina. Business started to decline. Employee and retirees watched as senior management made decisions to raise prices and then sell stores. The share value started to decline in the early 2000s, losing significant value, until employees received notice that they would not get their distributions. Company executives stated they planned to make future payments when financial conditions improved. Employees filed a lawsuit in 2018 alleging senior management violated their duties by not acting as the stock value lost 90 percent of its value. The case was settled for nearly $9 million, with employees receiving a payout of approximately $1,000.24
Still, many companies successfully implement ESOPs. Axia Home Loans, a national residential mortgage lender based in Seattle, experienced record-breaking production and was able to attract top talent in the first year after creating its ESOP. After taking questions from non-managing shareholders about exit strategies, Gellert Dornay, president and CEO, looked into an ESOP and thought it would fit with the company’s innovative and forward-thinking culture. “Studies show that employee-owned companies experience increased employee satisfaction, retention, and productivity gains,” Dornay said, adding, “an ESOP rewards employees who contribute to the company’s success by allowing them to share in the company’s future increase in value.”25
So what enables one company with an ESOP, such as Axia Home Loans, to be more successful than another, such as Piggly Wiggly? It has a lot to do with the way companies treat employees. You can’t just call an employee an owner and expect them to respond positively. You have to do something to make them feel like an owner and then involve them as owners. Piggly Wiggly illustrates that employee ownership is not a magic elixir. “When employees run the company, our decision methodology is different. Everything is in the primary best interest of the shareholders, who are the employees,” Dornay said.26
Work-Life Benefits
In recognition of the numerous and sometimes competing demands on employees' time, companies are looking for ways to help. Organizations are taking an active role in helping employees achieve a balance between their work responsibilities and their personal obligations. The desired result is employees who are less stressed, better able to focus on their jobs, and, therefore, more productive. One tool companies can use to help their employees is extended leave through sabbaticals. Sabbaticals can be traced back to ancient times and Hebrew Sabbath practices. Modern sabbaticals are rooted in higher education, first being offered at Harvard to faculty to conduct research in the late 1800s. Today, corporations have adopted the practice to assist with work-life balance and employee burnout. Sabbaticals offer employees extended time away from work, that can be paid or unpaid depending on company policies. In today’s business environment, companies are juggling cutting costs and increasing profits while simultaneously battling to keep employees motivated and positive about work. Sabbaticals can be an important tool to help managers achieve this balancing act.
Reports vary on the percentage of companies that offer sabbaticals; however, offering employees this option can be an innovative tool to both recruit and retain employees.27 One benefit is that employees return refreshed and recharged. Morris Financial Concepts, Inc., a small financial planning firm, offers all full-time employees a paid, month-long sabbatical every five years. Kyra Morris, president and owner, says employees were working during vacations, even when discouraged not to. They are required to unplug during sabbaticals. Morris says sabbaticals work for both millennials and older employees and are a great recruiting tool.28 Zillow, the online real estate giant, offers six-week half-paid sabbaticals to employees at all levels of the organization after six years. Amy Bohutinsky, Zillow Group’s former chief operating officer and now board director, says the company wants to reward long-term employees, encourage them to have a life outside of work, and have them come back recharged.29 Another benefit is the opportunity to learn new skills, which can be an alternative to layoffs. Buffer, a social media management platform, has offered various sabbatical programs, including ones to help employees learn new skills to successfully transition into another department. Learning sabbaticals fit the company’s value of self-improvement.30
Nurturing Knowledge and Learning Workers
Most organizations have specialized workers, and managing them all effectively is a big challenge. In many companies, knowledge workers may have a supervisor, but they are not “subordinates.” They are “associates.” Within their area of knowledge, they are supposed to do the telling. Because knowledge is effective only if specialized, knowledge workers are not homogeneous, particularly the fast-growing group of knowledge technologists such as data analytic specialists, programmers, and AI engineers. The rapidly growing AI industry is shaping workplace needs, especially for knowledge workers, many of whom are freelancers (about 25 percent). Companies need employees with both technical skills as well as critical thinking and problem-solving abilities. AI engineers, developers, and consultants are working with companies of all sizes to assist with integrating this technology into their businesses. Because of the pace of change with AI, companies are looking to freelancers for this work as they are often nearly 40 percent more efficient than their full-time employee counterparts with these skills.31
A knowledge-based workforce is qualitatively different from a less-skilled workforce. Increasingly, the success—indeed, the survival—of every business will depend on the performance of its knowledge workforce. The challenging part of managing knowledge workers is finding ways to motivate proud, skilled professionals to share expertise and cooperate in such a way that they advance the frontiers of their knowledge to the benefit of the shareholders and society in general. To achieve that auspicious goal, several companies have created what they call “communities of practice.”
Coping with the Rising Costs of Absenteeism
With today’s companies trying to do more work with fewer employees, managers must be attentive to the impact morale and employee performance have on absenteeism and turnover. According to the Bureau of Labor Statistics, the absence rate remains relatively steady around 2 to 4 percent for a variety of causes, including illness, childcare challenges, family care obligations, mental health needs, and transportation issues.32 It is estimated that employee absences cost companies as much as $575 billion annually.33 However, not all reasons for unscheduled absences are genuine. Although data show that around 2 percent of workplace absences are because of illness, there is some concern that employees are not really sick when they call in for an unscheduled absence. There are various reasons for an employee calling in sick when they are not really ill, including work burnout, mental health needs, home or family obligations, or lack of motivation to go into the workplace.34
While some employees are taking a day off, employees covering for unscheduled absences are pushed to do more. The result is lower productivity and lower morale, especially if chronic absenteeism is not addressed. In addition to an attendance policy, offering incentives for attendance, wellness programs, employee assistance programs, and other benefits that show care for employees can lower absenteeism rates.35
Managing Change
Using Communities of Practice to Motivate Knowledge Workers
Communities of practice (CoP) have been so named since the early 1990s as a way to motivate and engage employees. One company that has experienced tremendous success with CoPs is Schlumberger Limited, an oil-field-services company with over $35 billion in annual revenue. As with all CoPs, what Schlumberger calls Eureka groups are comprised of similar professional employees from across the entire organization. Employees participate in one or more of 284 Eureka groups ranging from chemistry to oil-well engineering.
Before the establishment of the communities, Schlumberger’s engineers, physicists, and geologists worked well on individual projects, but the company was ignorant of how to help its employees develop the professional sides of their lives. Since the company sells services and expertise, motivating and cultivating its knowledge workers was a critical success factor. Former CEO Euan Baird felt he had tried everything to manage and motivate the company’s technical professionals—and failed. That’s when he decided to let them manage themselves. He ordered Schlumberger veteran Henry Edmundson to implement communities of practice.
Schlumberger’s Eureka communities have been a tremendous success and helped the company leverage its knowledge assets. Today, self-created CVs are posted on the company’s internal website, allowing employees across the 85 countries where the company operates to consult the résumé of nearly every company employee to find someone with a particular area of knowledge or expertise. Another reason the Eureka groups are so successful is that they are completely democratic. Participating employees vote on who will lead each community. An employee who is backed by his or her manager and at least one other community member can run for a term of office that lasts one year. At the time, the elected leaders of Schlumberger’s Eureka communities cost the company about $1 million a year. “Compared with other knowledge initiatives, it’s a cheapie,” said Edmundson.
John Afilaka, a geological engineer who was a Schlumberger business-development manager in Nigeria, stood for election to the head of the company’s rock-characterization community, a group of more than 1,000 people who are experts in determining what might be in an underground reservoir. He beat an opponent and spent 15 to 20 percent of his time organizing the group’s annual conference and occasional workshops, overseeing the group’s website, coordinating subgroups, and so forth.
Retired CEO Andrew Gould says the self-governing feature is crucial to the Eureka communities’ success. Technical professionals are often motivated by peer review and peer esteem, he says, implying that stock options and corner offices aren’t sufficient. The election of leaders, he says, “ensures the integrity of peer judgments.”
Schlumberger’s use of CoPs is known worldwide. The company has been a 12-time European MAKE (Most Admired Knowledge Enterprises) winner, and declared the overall winner three times, most recently in 2017.
- How do you think communities of practice help companies like Schlumberger manage in dynamic business environments?
- Although communities of practice are commonly thought of in regard to knowledge workers, could they successfully motivate other employees as well? Why do you think as you do?
Sources: Rory L. Chase, “2017 European Most Admired Knowledge Enterprises MAKE Report,” Teleos—The KNOW Network, https://www.theknowledgebusiness.com, accessed January 24, 2018; “Schlumberger Cited for Knowledge Management,” https://www.slb.com, accessed January 24, 2018; “2016 Annual Report,” Schlumberger Limited, 2017; “John Afilaka,” https://www.zoominfo.com, accessed January 24, 2018; “RezFlo Services Company Limited,” https://www.rezflo.com/, accessed January 24, 2018; Olivia Pulsinelli, “Reemerged Energy Co. Hires Halliburton Exec, Names Former Energy CEOs to Board,” Houston Business Journal, https://www.bizjournals.com, accessed January 24, 2018; Chris J. Collison, Paul J. Corney, and Patricia Lee Eng, "Knowledge Management in Schlumberger: ‘Eureka!’" In: The KM Cookbook: Stories and Strategies for Organisations Exploring Knowledge Management Standard ISO30401 (Cambridge University Press, 2019), pp. 111–120; "Eureka Moments," SLB, https://careers.slb.com, 2019.
Another trend related to employee morale and absenteeism is turnover. The number of employees who are job-searching is on the rise. A recent Gallup survey found that 51 percent of current employees are looking to leave their current job, but Newsweek reports that 92 percent are actively seeking new employment.36 Both figures are great cause for concern. A high rate of turnover can be expensive and dampen the morale of other employees who watch their colleagues leave the company. The top reasons cited for employee turnover are career opportunities, discontent with wages and benefits, and poor leadership.37
High rates of turnover (or absenteeism) at the management level can be destabilizing for employees, who need to develop specific strategies to manage a steady flow of new bosses. High rates of turnover (or absenteeism) at the employee level compromises the company’s ability to perform at its highest levels. In order to stay competitive, companies need to have programs in place to motivate employees to come to work each day and to stay with the company year after year.
Concept Check
- What benefits can an organization derive from training and educational opportunities and stock ownership programs?
- Why are sabbaticals growing in popularity as work-life balance tools?
- How are knowledge workers different from traditional employees?
- Why are absenteeism and turnover rates increasing, and what is the impact on companies?