Employee motivations in MSME's
Sumeet Varghese Sep 12,2011
It is perhaps a bit challenging to figure out what existing or prospective employees look for when seeking employment with an MSME. Obviously, there is likely to be wide disparity here not only with respect to various employment specific factors but also with regard to the importance accorded to these factors I by individuals who might consider working with an MSME.
In an attempt to try and uncover some typical factors that motivate employees in MSME setups, this author polled a cross-section of employees at a firm trading in engineering goods. As part of the exercise, employees were asked to rate 14 critical motivating factors* (see table below) in order of priority.
Interestingly enough, with some exceptions the employees picked up critical job-related factors like Adequate Salary (by far the number one priority for most), Job Security, Opportunities for Promotion, Interesting Work and Responsibility and Independence as the top 5 drivers. However, with regard to the rest of the drivers, there appears to be a lot of variation in terms of the priorities indicated by the employees.
For a clear majority of employees at this firm, an appropriate compensation package held more promise than say, equally important job-related drivers like Restricted Hours of Work or a Considerate and Sympathetic Supervisor. While the latter would be a bonus, there was no compromising with the status accorded to Salary. In some ways, this implies that in order to make the employment proposition strongly attractive, MSME owners need to focus on salary first.
However this is easier said than done. With no job specific and industry benchmarks available in the first place, MSMEs are prone to look for internal salary benchmarks and peg employee salaries around a particular salary point or level relative to the benchmark.
Interestingly, this internal benchmark can sometimes be the highest paid employee or some threshold figure that the owners may not want to cross. Oddly, even where market rates for a particular position are available MSMEs may tend to discount the information by treating it as illogical or irrational. The sector specific exuberance in salaries notwithstanding, employees do tend to take salary related information far more seriously than their MSME employers. Obviously there is no one reason why small and medium businesses may want to place a cap on the salaries they can afford. But it is important to understand whether salary related decisions are made rationally or irrationally. It may not be far from the truth to claim that the strong cost-mindset or savings habit that informs the various purchase decisions MSME owners make on a day-to-day basis plays a large role in influencing the salary choices that owners offer to their employees. One MSME owner whom this author met appeared quite upset about the fact that minimum wage rates in other locations were particularly competitive.
Apparently one of his suppliers had told him that he offered his casual laborers barely 50 rupees and a plate of rice a day. Without doubt, getting the employee price right constitutes perhaps one of the most important business decisions for an MSME. The only hitch however is the data inputs that feed this decisioning process.
Perhaps, the next most important thing that an employee considers after salary is job security. For both semiskilled and skilled workers planning to join a small business, there is usually a strong desire to learn more about the level of security the job offers. Whereas for some, this may take the form of understanding the hire and fire provisions that operate in the organization, for others, it might be something as basic as understanding the sustainability of the organization. Obviously, the manner in which employees are terminated at an MSME communicates a lot about the level of job security available there. In cases where expulsion is based on the whims and fancies of the owner, jobs may appear just as arbitrary as the measures taken to remove employees.
As long as removal is construed as fair and square, MSMEs will have to grapple with employee disaffection and its unwanted by-product, job disconnect. Obviously exit interviews in such a scenario will appear meaningless and empty if there are no proper procedures in place to expel employees on disciplinary grounds or terminate them on performance issues. In one particular MSME, the owner made it a point to follow a multiple warning system before asking employees to leave. What is more he also allowed the warned employee to submit his side of the story every time the employee was hauled up. More importantly, the owner made sure he spoke on the basis of facts and evidence rather than his personal perception, hearsay and emotion.
Oddly to an MSME owner, a potential employee's focus on job security may be perceived more as a liability than an opportunity. This is because an employee who's more anxious of such issues tends to come across as someone who's there just for the job. Accordingly, his /her interaction with others in the organization begins to be viewed as characteristic of job-securing behavior.
While this may not be entirely untrue, MSME owners should use this wanted or unwanted focus on job security to clarify job and performance related expectations. In one MSME the owner made it a point to communicate sales related turnover and business profits every day for one whole quarter to drive home the point that employees are equal contributors to the business. More importantly, he also managed to demonstrate the link between employee performance and business performance. In a sense he was clearly communicating the fact that job security is ultimately a function of employee performance by showcasing how employee contributions were directly impacting business profitability and sustainability.
Opportunities for promotion
As businesses grow, employee aspirations are bound to acquire momentum and direction. For many MSME's this is a conundrum that may appear difficult to crack. However, the drive to move up in the organization is just as basic as the entrepreneur's desire to scale up his/ her business. Sadly, like many of their larger counterparts, MSME's may lack the ability to provide greater visibility on where an employee is headed during his/her period of employment. This is somewhat similar to driving in the dark without headlights on. While MSME's approach this problem in their unique way, what is oftentimes missing is a simple way of communicating who is where in the organization's scheme of things. At one MSME the owners recently discovered that their employees lack not just a proper role description but also a proper organizational chart clearly showing who is reporting to whom.
Obviously the trigger for this realization was the fact that almost all employees at the firm barged in sometime or the other during the course of the day and ended up distracting them for some or the other matter.