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The folks at McKinsey issued a timely article that brings fresh data to the quixotic search for the right formula to attract and motivate talent. [FYI - You may need to register to view the article.] Based on their own research, the authors suggest non-financial incentives are more effective at motivating employees than traditional financial incentives like salary hikes and bonuses. These findings concur with other surveys that confirm that for employees with satisfactory salaries, financial incentives offer mostly fleeting motivational benefits. But although most companies are cutting back on financial incentives due to the ongoing financial crisis, it doesn’t appear many of them are shifting to other (more effective) reward and recognition programs. For many the adjustment of incentives remains an exercise in management of costs.
According to the article, the most effective non-financial motivators are:
- Praise from direct managers
- Leadership attention (one-on-one meetings)
- Opportunity to lead projects
Anyone with management experience is likely familiar with these incentives – and understands intuitively why they would work. As the authors write: “The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth. These themes recur constantly in most studies on ways to motivate and engage employees.”
So if all this seems logical and backed by research, why do so few companies emphasize non-financial incentives? The McKinsey authors suggest the biggest reason is old habits are hard to break – traditional wisdom is that money talks louder than anything else. Another reason – which I’ve witnessed in my own corporate experience – is that non-financial incentives often entail more time and commitment from managers, and many companies are hesitant to juggle or stretch the agenda of their managers. Another theme woven through the article is that some companies equate basic communication (such as town hall meetings) as automatic motivators, while in reality the outcome is highly dependent on the specific information, format and occasion.
Perhaps this is another example of how some companies under strain tend to resist dramatic change or new ideas, rather than embrace the opportunity for innovation…or the inability of many leaders to seriously consider the preferences of their employees. Certainly, there is no shortage of publicity and plaudits for progressive employers who leverage a wide range of benefits to engage their employees – think Fortune’s Best Companies to Work For. But clearly, this has not been enough to alter the core incentive programs of many employers.
Many big developments in technology seem to follow the same pattern: launch, hype, boom, more hype, backlash and, too often, bust. Or at least rumors of bust. But usually this pattern is more hyperbole than reality. Take Second Life as an example. When Second Life emerged a few years ago the hype was deafening, and a host of companies (including Dell, where I worked at the time) rushed to build virtual islands. Then the buzz gradually died down. Some companies left, disillusioned about the difficulty of generating revenue or leads through their island. Others stayed on but struggled to find value or purpose in their investments. Many just stayed away, confused by the technology. Some in the media and blogosphere suggested Second Life was heading towards the crowded bone-yard of technology.
Well, Second Life is alive and well – if you’ll pardon the pun. In terms of size and reach, Second Life shows some pretty strong numbers – though it must be said there are skeptics regarding these statistics. But beyond the crude numbers, I would argue Second Life is showing resilience and relevance through the innovation of its inhabitants. With the benefit of virtual experience, many are finding the benefits of Second Life may be more nuanced than pure marketing – for example cutting communication costs or developing new learning modules.
For a look at some of the creative uses of Second Life – ranging from e-learning to virtual meetings and collaborative design – check out these recorded sessions from the Gronstedt Group, a consulting firm that has long advocated the benefits of 3-D online environments like Second Life. [Disclosure - Anders Gronstedt is a friend and did work for me when I was at Dell.]
Perhaps the most important recent development is the announcement of Second Life’s new platform for the enterprise – which will allow companies to deploy their own, customized virtual environment behind their firewall. This beta program – set to formally launch in Q1 next year – addresses concerns about security and firewalls that have caused many organizations (including the last one I worked for) to stay away from Second Life. Check out Fast Company’s take on this development here.
As this coverage notes, the potential for companies to leverage a “closed” Second Life platform to improve and expand their internal communications is huge. The interactive, graphic and multi-media properties of SL lend themselves well to everything from virtual meetings to project collaboration and training. This particularly holds true for global companies with dispersed or telecommuting workforces. The possibilities are exciting…and endless. Yesterday I participated in a briefing in SL that featured an architecture firm that develops designs using a wiki “tree”, which allows visitors to propose and rank design additions or changes on existing projects. If companies are paying attention, I suspect some of those who avoided or left SL may take a second look. It would be well worth their time.
A recent post by the folks at Melcrum in the UK provides evidence that more companies are adopting cloud-based collaboration platforms (in this case Google Apps) for their internal communications. Last week Jaguar and Land Rover announced they were also switching to Google. And Google isn’t the only big player in this emerging field: IBM recently introduced its own cloud collaboration suite. (I haven’t even mentioned the host of new providers that offer services that go well beyond email, calendars and file-sharing – notably internal micro-blogging and networking tools.)
Anybody who has worked inside an organization is familiar with the debates that occur on this issue. For the cons, there are typically concerns about information security and integration with firewalls, while on the pro side the main motivations tend to be lower cost and a more efficient, integrated platform that is accessible through any Web connection. In my experience, the naysayers are often in IT while proponents are employees looking for better ways to collaborate and communicate with peers. Coincidence? For many companies – slowed by balkanized email networks, weak IT governance and outdated infrastructure – going to a cloud platform is an easy way to start fresh using external resources, often at much lower cost than an infrastructure overhaul. For smaller companies, it’s almost a no-brainer. I’ve been involved in several start-ups in recent months and all of them are using cloud-based platforms for their email, file storage and collaboration needs – at no cost.
So why so much resistance? Likely a new version of the proverb that you can’t be fired for buying IBM – many prefer to play it safe. I’m certainly not a technical expert, but I suspect that the popular chestnuts about unreliable cloud networks and data risk are overblown. I’ve experienced far more problems with internal systems than the occasional blip with cloud-based applications. And is there a network anywhere that is more robust than Google? Companies should certainly do their due diligence, but when the status quo for many employees is working on creaky, inefficient systems – if they even have access to their network – there is no excuse for at least not considering the cloud.
Very interesting presentation by Morgan Stanley analyst Mary Meeker (yes, that Mary Meeker) at the recent Web 2.0 Conference in San Francisco. Check out this article and the actual presentation here. Besides a fairly healthy prognosis for internet (and related business) growth, the salient theme is that the mobile internet is big…and booming – led in part by “explosive” growth in iPhone and iTouch devices. Indeed, a major fuel to this growth is the sheer increase in cloud-based mobile devices using platforms like GPS, 3G, wi-fi and Bluetooth. According to Meeker (who backs her arguments with mountains of statistics), mobile internet growth is far out-pacing historic desktop internet adoption.
Some of the stats in the report are pretty overwhelming, notably those on the size and growth of major Web platforms:
- YouTube – 445 million users, 35% Y/Y growth, #2 global search engine
- Facebook – 390 million users, 153% Y/Y growth, #1 site in time spent (6 billion minutes spent each day)
- Twitter – 55 million users, 1,171% Y/Y growth, 5 thousand tweets per second during peak times
- demandMedia – 55 million users, 46% Y/Y growth
According to Meeker, the “secret sauce” to mobile internet growth is the ability to localize data in real-time. The combination of this instant localization with a multi-media, mobile device (like the iPhone) and platforms like Facebook – which allow for integrated, multi-purpose content and applications — creates a highly attractive combination.
And if we needed any more confirmation of the obvious, Meeker argues that next generation platforms (social networks and mobile applications) are driving unprecedented changes in communication and commerce. She writes:
Plenty of other good information in the presentation on the implications of these changes on broadband providers and device manufacturers; the message is there will be big winners and losers as a result of these seismic shifts.
Thanks to my friend – and University of Texas alum – Paul Walker for the tip on this report.
Technorati’s annual “State of the Blogosphere” is full of interesting findings, but the headline is that the influence of the blogosphere on everything from politics to marketing continues to grow. [Note: the survey is limited to bloggers and data from the U.S.] Here are select findings:
- The blogosphere (in the U.S.) is doubling in size every 230 days
- Hobbyists (who blog for fun) make up 72% of bloggers
- Though Pros (who blog full-time for a company/organization) make up only 4% of bloggers, they are becoming more prolific and influential
- Twitter has had a big impact on the blogosphere, fueling the dramatic rise of micro-blogging…up to 74% of bloggers now use Twitter
- The blogosphere continues to take over turf historically owned by traditional media sources and journalists
- Self-expression and sharing expertise continue to be the primary motivations for bloggers, and 70% of all respondents say that personal satisfaction is how they measure the success of their blog
- For pros, the key measure of success is traffic – or unique visitors
- Blogs cover a wide and diverse range of topics – including many niche subjects
- Most bloggers describe themselves as “sincere”
- Reasons for blogging range from sharing opinions and expertise (popular with hobbyists) to attracting new clients or business opportunities (more important for the pros)
- 30% of respondents say it’s important they conceal their real identity – most for fear or harassment
- Most bloggers are positive about the impact of their blogging on their personal and/or business lives
No real surprises for me in these findings, though the relatively small number of core professional bloggers seems disproportionate to their profile and influence. Then again, this tendency mirrors the trend of the small minority of people who contribute or comment on blogs. The one finding that seemed dissonant is the plurality of bloggers who feel compelled to conceal their identity. I’m not sure how this fits with the ethos of transparency, but they clearly feel compelled to separate their blogger persona from their personal identity.
FYI: Technorati is posting additional comments and articles, so look for updates in the days ahead. A couple of third-party comments on the report are here and here.

