Employee Motivation: The Expansion Stage Challenge

Ways to keep your employees motivated even as your company grows and your budget for compensation dries up

In my last post, I discussed the challenges in keeping employees motivated as a company transitions from its start-up days into the growth stage.

In this post, we will examine a few strategies management teams can employ to keep their employees motivated and engaged so that the company maintains a momentum even as it grows and matures as an organization.

A manager can motivate his or her team members in many ways, but unfortunately most people rely on the most obvious and basic mechanism, which is compensation. Compensation is a very important factor, but it is not the silver bullet for every situation. As I have noted previously, in the early days start-ups can liberally give out stock options and other forms of equity compensation to attract and retain its employees, but after a few rounds of funding, typically there is not a lot of available options left to be dispensed, especially to non-executive employees. A growth stage firm actually will have to be more prudent with its finances, since it now answers to many more stakeholders (investors, customers, partners and employees) and does not typically have the cash to liberally reward its employees. Clearly, other employee motivation systems are needed to complement compensation.

A bit of human psychology will help here. One single motivational system will not work for all companies, all departments or all employees.  Some people will desire public recognition or meritorious awards, even if they are not necessarily accompanied by major monetary rewards. Some employees will want to be individually recognized for their personal achievement. Some set really high bars for themselves, and thrive in environments that celebrate attainments of difficult goals. There are other employees who want to have more control of their work, want more responsibility and love to shoulder more accountability. Their entrepreneurial spirits will be buoyed by management’s encouragement of new ideas, new products and innovation. This is a particularly potent cure for expansion stage software companies, because they can establish little “Labs” of innovative team members, replicate the heady early days, and keep these employees as motivated and productive as when they first started out.

However, management will do well to recognize that not all of their employees are looking for massive growth and disruptive innovation. As the company gains in scale, it will need employees who have more experience in working at larger organizations and who understand the intricacies of large teams and projects. Naturally, these employees will be more comfortable working in an environment with fewer uncertainties, an organization structured by process and metrics. To motivate them, the company needs to focus on institutionalizing its processes and making transparent its KPIs and operating metrics.

Last but not least, everyone in the company can be motivated by having a sense of mission, a unity of purpose. This gets very hard as the company grows and expands into different markets and geographical areas, since employees working on different projects and markets will not understand each other. To fully exploit the motivating power of Vision, Mission and Values, the company has to invest in overcommunicating these principles to ensure that all employees hear and believe in the same mission, and that everything the company does follows these aspirations. This is one of the key elements of OpenView’s Extraordinary Execution framework, and it has proven to be both an important strategic exercise and a powerful motivational tool for our portfolio companies.