Small business owners, who are unlikely to have the budget for substantial pay rises or cash bonuses, need to try other ways to engage their staff and get them working to their full potential, human relations experts say.
But Fiona Reed, principal and head of talent management at Mercer, warns that small businesses still need to pay competitive rates to keep employees, with pay the most important factor in a person's commitment to an organisation, according to a recent Mercer Survey.
The Australian survey, which revealed that 40 per cent of people were thinking of leaving their job, found other factors that influenced staff motivation included how good a fit they are for their job, their career path and flexible work practices.
Here are five low-cost tips on how to motivate staff.
Ask staff what they want
Sometimes the best ideas on how to motivate an individual staff member can come from the staff member themselves.
"One thing that you can do is ask the staff how would they like the boss to show appreciation," says Reed. "If the boss makes a decision about what they're going to do - let's say the boss says Friday drinks are what we're going to do - it might be that people don't want that, so the boss can take the wrong tack and not get the advantage of what they're doing or even make things worse."
More broadly, it's important to invest time in staff, says Reed, "to engage with them in a really constructive and meaningful way".
Likewise, make a point of listening to staff when they have a problem. "It can be easy in a small organisation where you've got to do everything to forget that time actually has to be set aside for listening."
Positive - and challenging - feedback
Everybody loves to be told they've done a good job - it makes people feel good and boosts morale. But Eve Ash, an organisational psychologist at training company Seven Dimensions, says any feedback should be specific: for example, you did a great job because of X, Y and Z.
"Specific feedback about what they did makes people feel fantastic," she says.
Many staff are also seeking feedback that improves performance. "If a manager can set that up with their staff to have an open honest relationship and say 'if you do it that way ... ' you're going to get an even better response," says Ash. "People do like being able to perform."
Small to medium businesses usually won't have the scope to reward ambitious and well-performing staff with promotions. But they can still motivate staff by helping with their career development, says Narellel Hess, organisational psychologist at human relations consultancy Challenge Consulting.
Give a staff member a specific project that will test them and increase their skills or team them up to work with someone who they can learn from. "It might be a case of helping them to develop skills that they would have developed if they were going up to a higher level in a different business," she says.
Small businesses are sometimes better placed to make flexible working arrangements for staff than some large organisations. For some staff - such as those who need to pick children up from school or older employees who may no longer want to work full-time - flexible hours can be a huge incentive.
But Hess says employers shouldn't just give away flexible hours and expect staff to be motivated as a result.
"It's one thing to offer people flexibility, but they have to see how it's valuable and how the business is providing it at a value-add to them, or they potentially won't respect it and use it as motivation," she says.
Employers "need to be quite clear as to why and what is the value to their employers from that and what is the cost to them".
Employees want to know that the work they're doing is contributing to the success of the company.
"What motivates employees is being involved in a conversation at the senior level, being able to see that what they're doing is affecting the business as a whole," says Hess.
"You want to feel that what you're doing is making a difference, so that you're feeling engaged and motivated to work."
- Sydney Morning Herald