A bigger paycheck is just one way to make employees happy by Michael Maccoby @FortuneMagazine September 23, 2015, 11:57 AM EDT E-mail Tweet Facebook Linkedin Share icons It’s a well-established fact: Companies need engaged employees. They are motivated to innovate, increase productivity, and satisfy customers. The sad truth, however, is that there are just not enough of them. Gallup surveys report that less than a third of American employees are engaged at work, and the percentage is even lower in other countries. Why aren’t more workers engaged? Companies spend billions on management and leadership training that invariably includes motivation theories and advice about how to get people to care more about their jobs. The answer is simple: Most of the solutions out there are misleading or just plain wrong. Most managerial theories of motivation fit into two buckets: hard and soft. Hard theories advise using carrots and sticks: money, promotion, threats. Soft theories include bosses who show empathy and giving workers more freedom. Under hard motivation, if employees meet performance standards, they keep their jobs; if they do better, they are paid more and may be promoted. But money can also distort drive and even demotivate. Someone hoping for a bonus may try to please the boss by withholding negative information or constructive criticism. Workers competing for a limited pot of money are not likely to collaborate. And employees at companies where money is directly tied to production often find ways to game the system. Hard motivation that plays on greed and fear can get compliance but not engagement. Would employees be more motivated by the application of a soft theory like a caring boss? What about giving them more autonomy and power in making decisions about how they work, when they work and who they work with? Clearly, people prefer a caring manager, and many of them quit because of an autocratic or uncaring boss. But recent studies show that an empathetic manager doesn’t inspire employees to work any harder; they may be happier, but that doesn’t mean they’re more engaged. And autonomy can be quite motivating for self-starters, but not all employees are equipped to go off by themselves to innovate; nor does autonomy always encourage people to collaborate. There is no one best way to motivate and engage people at work. Managers and leaders need to create a culture that integrates elements of hard and soft theories into what I call smart motivation, including five Rs: reasons, responsibilities, recognition, relationships, and rewards. All of the Rs can strengthen engagement, but their relative importance can vary for different personality types. Here is a brief description of the five Rs and how different personality types prioritize them. Reasons. Employees are motivated when the purpose of their work is meaningful to them. Caring personalities are motivated to help people. Visionary entrepreneurs like Steve Jobs, Bill Gates, Jeff Bezos, John Mackey, and Elon Musk are motivated to change the world. A recent study at the Brookings Institution indicates that millennials may be engaged when working for a company that supports solutions to social problems. Responsibilities. Employees are motivated when they can exercise their skills and when they are in the right roles, doing what they enjoy doing. In The Art of the Deal, Donald Trump wrote that he liked making deals: “I don’t do it for the money … I do it to do it.” For many technical workers and professionals it’s solving problems; for craftsmen, it’s building high-quality products; for doctors and nurses, it’s treating patients. Autonomy is especially a factor for professionals and craftsmen. Interactive personalities are more likely to feel engaged in collaborative projects, while exacting personalities prefer more independent work time. Recognition. Everyone wants to be noted for their contributions, improvements, and innovations. Toyota TM gains engaged assembly line workers by recognizing and rewarding ideas, no matter how small. At the automaker’s Ngoya factory I once visited, a supervisor told me that his workers offered an average of 50 ideas per person per year, of which 80% were adopted. On the converse, people become disengaged and resentful when their contributions are not recognized—and especially when bosses take the credit for them. Caring personalities, who place a high priority on interpersonal connections, want to be recognized for helping or supporting others, while visionary personalities, who value accomplishment, want to be recognized for surpassing goals. Relationships. Great relationships with bosses and co-workers are a powerful motivator. Builders of great companies such as Thomas Watson of IBM IBM and Bill Hewlett and Dave Packard of Hewlett-Packard HPQ made “respect for the individual” a key value. Disrespect, on the other hand, triggers hostility. And relations that engage don’t only come from managers who mentor. They can happen with co-workers and customers too. While good relationships are important to people with all different personality types, their meaning varies. Caring and interactive types tend to focus on connections and conviviality, while visionary and exacting types want access to expertise, resources, and power. Rewards. They strengthen motivation and engagement best when they reinforce desired behavior. In Toyota’s Ngoya factory, 20% of workers’ pay depended on whether they helped others and created harmony in the group. But money isn’t the only effective reward. When I lectured at Google a few years ago, I had lunch with a group of its millennial employees, and most I talked to did not expect to stay there. They planned to join startups or to work for NGOs that were taking on social issues. Those millennials were engaged by opportunities to learn new skills or create new knowledge—not only interesting job assignments, but also taking courses or being sent to conferences. Which of the five Rs most motivates you? What do these Rs mean to you in your specific context? If you are leading a team, ask the members to rate the Rs, describe what they mean, and score how well they are being practiced in your organization. I’d be interested in the results. Michael Maccoby is a globally recognized expert on leadership, who for 40 years has advised global leaders in businesses, governments, unions, universities, and non-profit organizations in 36 countries. He is president of the Maccoby Group in Washington, D.C., which offers consulting, coaching, research, and leadership workshops. The article above is adapted from his book, Strategic Intelligence: Conceptual Tools for Leading Change.