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Every advisor wants his or her support staff to operate to its full potential. A conversation last week with a senior manager at a leading bank provided insight into what advisors can learn from financial institutions on using variable compensation to drive performance.
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Before getting into the details of this conversation, let’s remember that most advisors and most managers overstate the importance of compensation in driving long-term performance. Every research study on what motivates people shows the same thing: As long as employees are paid a fair salary, what creates sustained motivation for most people is achievement, recognition, work that’s challenging and fulfilling, autonomy and the opportunity to learn and progress. Here are some articles that speak to motivating your team:
- McKinsey’s research on why most companies get motivation wrong
- The importance of regular progress
- The impact of autonomy, mastery and purpose
- Asking the question that can motivate your team
- Why to focus on the positive difference you’re making in clients’ lives
Most of these aren’t new insights. In 1968, psychologist Frederich Herzberg outlined his ground-breaking research on the core principles of motivation in the best-selling Harvard Business Review article “One More Time, How Do You Motivate Employees?” What was true 50 years ago still applies today — the article is still well worth your time.
All that said, there’s also strong evidence that the right compensation plan can make a meaningful impact in boosting short-term performance. The key is getting the right structure for that compensation.
