How to increase employee performance and psychological health

How do you get employees to perform at their best, delivering what’s needed, with minimal oversight? Not so simple, is it?

To help us, we are going to consider Self Determination Theory (SDT), which looks at how the social environment an individual is in affects what type of motivation they have and how this affects their learning, performance, experience, and psychological health. 

There are two basic categories of motivation:

Intrinsic motivation (or autonomous motivation), involves performing a task because it’s personally rewarding to you.

Extrinsic motivation (or controlled motivation), involves completing a task to avoid punishment or to receive a reward.

In business most of our management tools are based on extrinsic motivators because it is externally controllable. We use rewards such as pay packets, job titles and/or annual bonus and we use punishments such as disciplinaries. Using extrinsic motivators is deeply baked into our culture, such that we often don’t see any other option. Let’s consider the purpose of a manager. Fundamentally they manage Human Resources to complete tasks. If someone is not performing it is down to the manager to performance manage them. If someone is performing, perhaps they get rewarded by a salary increase or a promotion. 

Obviously not all examples of use of extrinsic motivators are bad. We value the pay packet, the job title and the bonus. In return we agree to abide by work place rules and should expect negative consequences if we do not. 

The problem with this method of management is that only one thing matters, so only one thing is considered: has the employee complied and performed the desired behaviour. This thinking is flawed. Focusing on how to control a “human resource” to comply does not lead to the best outcomes. It fundamentally misunderstands the complexity of human motivation.

For example, early in my career I worked for a company that manufactured products. Due to the assembly line nature of the manufacturing, if an employee was late for their shift this could have a large negative affect. As a result the company wanted to reduce employees being late. Their solution was to implement a companywide policy. Any time an employee was even a minute late (as defined by the clocking in system) this had to be formally justified to HR. If an employee was “late” 7 times in a 6 month period they would get a verbal warning. Punitive action progressed. If an employee was late 14 times they were to be fired. I hated this policy. Even though I was usually prompt, I had an hour commute to the office through busy traffic. I felt very keenly that there were only ever 14 minutes (i.e. 1 minute late 14 times in 6 months) between me and being fired. This felt very unfair. 

But it worked! This policy did reduce lateness and I’m sure the HR manager got his bonus for the successful intervention. However, I noticed a curious thing in the department I worked in. Before the policy was announced each of us tended to work an hour extra each day. After the policy, I noticed that this stopped. I remember doing the calculation. In our department alone, the company had lost 1 hour a day for each of the 30 staff. That’s close to 4 extra members of staff working 8 hours a day! And that was just a crude measure of employee productivity and commitment to the company. 

Normal management tools do not help explain what went wrong in this example. Logically, the company was just enforcing what each employee had contractually agreed to when they joined the company. But similarly, by no longer working an hour extra, employees were just enforcing what they had agreed to. It is “just” transactional, right?  

Self Determination Theory (SDT) gives us a different, more human way of understanding what happened. But first let’s understand what it is. SDT argues that just as humans have physical needs (food, drink etc), we also have basic psychological needs. If these needs are met we are more likely to function at our best, reach our potential over time and to maintain our health. If we have these conditions we tend to be much more autonomously motivated, so we are performing work for its own sake.

The phycological needs are:

  • Autonomy – defined as how much control we have over how we complete our day-to-day tasks
  • Mastery (or competence) – defined as whether we have the skills to achieve what we need to achieve
  • Belonging (or social connection) – defined as whether we have meaningful social connections. If we belong to a group then we have people that we can rely on to support us.
  • Vision  – defined as the goal we are intentionally moving towards. This one is not explicitly called out in SDT as a top level need, technically it is a part of autonomy, but people experience positive emotion in relation to the pursuit of a valuable goal. I have found out when working with teams over the years that paying attention to what people’s personal vision is is crucial. If they have a sense of meaningful progress which aligned to the company wider goals then achievement in their work promotes the other phycological needs.  

So let’s use SDT to help us explain what happened in my department. Previously we had felt a sense of loyalty to the company. We found the work engaging and felt like our contribution mattered. We were autonomously motivated. Sure, we wouldn’t be there if we were not being paid, but we enjoyed the work for the work’s sake. With the new policy, the company indicated to us that 14 minutes was all it would take for the company to sever our connection to it. This undermined belonging on multiple levels. The company no longer offered us a safe way to provide for our families. In addition, if our connection to the company was this tenuous then obviously our contribution to the company was not valued. This attacked our sense of Mastery. 

We had been choosing to work an extra hour so we could achieve our Vision of accomplishing the work. This aligned perfectly with what the company wanted. We were adults, in an adult relationship with the company. With the new lateness rule, it was clear that we were at the mercy of the company and so were treated more like children. This reduced our sense of Autonomy.  It is quite impressive that the company managed to undermine all our phycological needs in one policy. As a result, we no longer felt a strong commitment to the company Vision, our personal Visions became defined as against the company, giving the minimum required and, for me personally, quickly focused on getting another job where I felt more secure in providing for my family and where I cared again about what I was achieving.

As in our cautionary tale, be very wary about using the employee’s attachment to the company as a lever to change their behaviour.  Obviously guidance is still required and this is not a blank cheque approach, but this is more likely to result in a healthy and productive workforce. 

When leading people, you will succeed longer term if you provide an environment that allows for the psychological needs of your employees. This does not mean that you should not have rules in place, nor that you should do away with the normal extrinsic motivators, but these are less important in the day to day than people realise. Often those things that make a difference are the small things. Try:

  • validation: “you did really well in that task”
  • increasing warranted recognition: “you really went above and beyond there”.
  • allowing people to influence you: “what do you think the best way forward would be?”

These simple interactions contribute to autonomy, mastery and belonging whilst promoting a shared vision.

On top of improving your small interactions, try find ways that they can take more responsibility and self-determination. Obviously, the key is where possible, but some of my most cherished moments in my career is when I have seen someone who is struggling and then watched them flourish as I have restored or reinforced a psychological need. The key is you that you then get to step back rather so that they become responsible for their own success.

Good luck!

For an in-depth understanding of the science underpinning SDT, see:

Self-Determination Theory in Work Organizations: The State of a Science, Annual Review of Organizational Psychology and Organizational Behavior, Vol. 4:19-43 (Volume publication date March 2017)

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