The Motivation Trap: Why Salary Increases Don’t Help Teams Be More Effective

The Motivation Trap: Why Salary Increases Don’t Help Teams Be More Effective
The Motivation Trap: Why Salary Increases Don’t Help Teams Be More Effective

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Personnel problems persist in Russia. Companies not only find it difficult to find new employees, but also to retain current ones. Against the background of rising inflation, salary expectations of specialists are also increasing, notes Alexandra Borisova, an expert at the Aktion Personnel and HR service (part of the Aktion group). This is evidenced by the results of a survey conducted by the company among HR specialists from 493 Russian enterprises. In half, employees are more likely to ask for a salary increase in 2023. Not getting what they want, they quit, realizing that they will quickly find a new job in conditions of personnel shortage, Borisova adds.

The problem is confirmed by business. So, in 2023, employees of the food brand Bionova began to quit and move to other employers who offered higher salaries – the difference was 5,000 rubles or more. In conversations with management, they explained the decision by saying that life is becoming more expensive and current earnings are becoming small, says Alexandra Gudimova, marketing director of NovaProduct AG.

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To retain staff, the brand raised salaries by an average of 15-20%. First of all, the increase was received by line personnel, for whom the most fierce competition is going on in this niche. “We compete for it not only with other food production, but also with marketplaces and warehouses,” says Gudimova. The Tigrus restaurant holding took a similar step – the company raised salaries by 10-20% to prevent the outflow of personnel to competitors, who also raised their rates this year.

According to the recruiting platform, salary growth is now being felt in all areas. The average increased by 16% year on year, to 52,160 rubles. To retain employees, employers raise pay even in industries where the average level is already high. Thus, since the beginning of 2023, the income of IT specialists in Russia has increased by 15%, to 170,000 rubles in Russia and 210,000 rubles in Moscow, note the personnel company UTEAM.

According to Natalya Valdaeva, a partner at another recruiting company, MarksMan, financial motivation works for the most part. According to the company’s statistics, the number of refusals from new offers in the first half of 2023 increased from 25% to 50% compared to the same period last year. For many, an increase in salary is a sufficient reason not to leave their usual employer, she states.

Reward for work

However, increasing wages has a price – in return, the employer hopes for greater returns from specialists. However, this does not increase labor productivity; on the contrary, employees burn out, notes Timoshkina from UTEAM, based on a survey of companies (available from Forbes) among 118 HR managers and HR directors in companies with a staff of 50 to 3,000 people. Almost half of the respondents said that monetary motivation does not work. The trend is confirmed by a recent study by the Higher School of Economics, according to which 51% of employees are not ready for an increase in workload after an increase.

“Employees perceive a salary increase as a restoration of justice, as a reward for already hard work, sometimes overtime,” explains Timoshkina. She calls the current situation a “motivation trap.” According to her, the events of the last three years, starting with the coronavirus pandemic, have led to total fatigue of people. “They need something more than money as motivation,” she states.

Alexey Sukhanov, Vice-Rector for Research and Innovation at Sber University, agrees with this. According to him, a salary increase has a positive effect on an employee’s work, but for a short period of time – no more than two to three months. In the future, the new level of income is perceived as the norm. “Salary should be considered only as a tool for a fair assessment of employee competencies, and not motivation,” he states.

Many employers understand this, says Borisova from Aktion Personnel and HR. Thus, although in most of the companies surveyed employees demand a salary increase, only 11% of employers agree to this. 47% said they were not ready to raise rates. The main reason: money is a motivator that will quickly “dissipate,” explains Borisova. “People either quickly get fed up and demand a new one, or leave to look for a richer company,” she explains.

Complex incentives

To motivate employees to work more productively, other incentives are needed, Forbes’ interlocutors believe: “Setting interesting tasks, providing opportunities for professional and personal growth, thanking them for good work — this inspires employees,” emphasizes Sukhanov. He also draws attention to factors that destroy motivation: disrespectful attitude on the part of the manager, mistrust, devaluation of achievements. In the context of a shortage of specialists in the market and staff turnover, it is necessary to move towards more complex motivation tools than salaries, agrees Ilya Samofeev, co-director of the technology company red_mad_robot. Such a tool could be, for example, corporate training.

The trend towards non-material motivation is evidenced by the growth of vacancies with various bonuses for employees. In less than 2023, their number increased five and a half times compared to the same period in 2022, says Artem Kumpel, managing director of the Avito Rabota recruiting service. According to the company, the most popular bonuses are voluntary medical insurance, compensation for travel and meals, sports activities, free parking in the office and employer payment for mobile communications.

Other factors that attract specialists include a flexible schedule or the ability to work remotely, shows a joint survey by and the consulting company Yakov and Partners. “This speaks to the criticality of maintaining work-life balance (balance of working and personal time) for employees,” concludes Natalya Danina, labor market expert at the recruiting platform.

The article is in Russian

Tags: Motivation Trap Salary Increases Dont Teams Effective


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