How do you motivate your employees when there is limited upward mobility for them in the company?

Joseph, your question is a good one, based on the diversity of answers.

Tim Rutledge has stolen my response with his #1, before I could say it. (" Link the employee's work to something bigger and/or outside the company.") But that's OK, because Tim said it better than I would have!

So I'll provide an example in one of many famous Steve Jobs quotations:

Back in 1983, Steve was trying to coax John Sculley from Pepsi-Cola to Apple. At the time, Sculley felt that he had a pretty good gig at Pepsi, given his title, comp plan, stock options, etc. Sculley told Jobs, "No thanks."

Jobs being Jobs, looked at Sculley in the eye, and said,

"Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?"

In no uncertain terms, Jobs linked Sculley's work at Apple to something way bigger. The appeal worked, and Sculley went to work for Apple.

Great question, Joseph.
And great answer, Tim.

Jim Watson
http://jlwatsonconsulting.typepad.com/my-blog/

Reading over the various answers, I remember the long-time CEO of a company where I worked for over 30 years. He pointed-out that he never got a promotion. But he grew as the company grew.

In the beginning of the company, employees expanded their current jobs by seeking new responsibilities and growing the business. This was true for both management and non-management employees. From that experience I learned that "upward mobility" was not something that a company provides; it is something that each employee accomplishes for himself and his teammates. That lesson proved to be very motivating, and it remained true for my entire career there.

So, if employees lack motivation, perhaps it is because management stands in the way of creativity, initiative, and new opportunities. The most motivating thing they can do is to discover what the demotivators are, then eliminate whatever they find.

Joseph, great question. I have been selling for startups for most of my career. For me personally it's stock options. The smart companies tend to offer a lump of options upon joining the company then issuing additional options based on performance. Stock options give ownership in the business and a sense of importance. I will take 10,000 shares over a title change any day.

Best Wishes,

Ryan Lallier
Twiiter:@Rlallier

"Limited upward mobility" is never set in concrete. Positions are not filled forever because people leave for a variety of reasons creating vacancies and opportunities. New positions are generated in response to market demands; company reorganizations happen. The key is to impress on your work force that what they do matters and that if they do their work with excellence, there WILL be opportunities. Challenge them to think creatively and ask the question, "How can I make a greater contribution?" Every company needs creative contributors. It is those people who will be recognized and rewarded.

The best way I have found is to set the expectations right from the point of employment. If people are hired in knowing that there are a limited number of "rungs in the ladder", they will hold a different view of what being successful at this company looks like.

Next is to offer cross-functional and "stretch" assignments for employees who show initiative and want to advance. if the message is that "people grow here by learning as many aspects of the business as possible", they will feel (and indeed be) rewarded in these ways.

Finally, make employee development an actual practice in the company -- not a slogan. Require everyone learns continuously formally and informally and measure it. Make learning an important part of what is covered in manager/employee 1 on 1's and annual evaluations.

As a career nerd, I think Carole touched on an important aspect. For me, having cradle-to-grave ownership of a product, component, process or service provided by the company is as important as the compensation I receive for doing my job. Perhaps even slightly more so. If an employee owns something, they will be possessive of that thing. They will take pride in its success and be more responsive should there be a problem with it.

The reason I say it may even be more important is this. Consider two companies paying the same compensation. In one job, you are asked to attach a widget in an assembly line all day long. In the other, you are asked to be creative, design, implement, test and support the same widget. At least to a techie, one job is preferred over the other.

You will soon get tired of my standard response when the "M" word is used (you can't motivate anyone, it comes from within) Inspire, yes, you can do that.

Rant over. Some research I saw recently, HBR I think, showed that employees tracked over time and asked each day if they felt motivated, was this a good day? Answers all came down to one common factor. They were motivated on a day when they felt they had made progress. Could be progress in many ways. So perhaps a key task of the leader is to find how to help subordinates make progress, every day.

I guess there are lots of ways you can make progress other than just getting a promotion.

Believe it or not: Not all employees understand stock options or want stock options. So, perks, benefits, salary increases and general work environment (like a dog friendly work place) are necessary.

Yes, Ryan & Joseph its about involvement, get the people involved in the company as if it were theirs. Best of all though is for a company to expand so that the people can stay and get the promotions they seek.

In addition, Companies have brands, and all recruitment should look for people who have personal brands that align with a company brand, this helps people view things for the same perspective. If not via shares, or ownership, or values (brands) then perhaps you could help them start on their own, whilst you retain some ownership of their organisation, and treat people well, so that if things go wrong when they move on is also a good move for them to come back.

Encourage idea generation. Start a volunteer-run innovation group, which evaluates ideas and decides those that should be presented to management. Encourage "sanity time" and lead by doing. Hire baby boomers--they make great mentors.

I think it's a misconception that everyone wants to climb that ladder. Essentially management is another competence, so it's not even really 'up' but more 'sideways'.
There's lots of people who enjoy their current jobs, are doing what they are good at, and don't want to move 'up' if that means they have to stop doing what they like. 'Up' in their view is a better pay and perhaps more status, but definitely not giving up their current line of work.
In small companies, you can make them part of the decision chain.

In addition to ownership and creative involvement, many people want to be part a family. As others have mentioned, being recognized for one's contribution to building a place where the kids are going to grow up, instead of laying bricks. Having a say in how the business operates and owning a process may be equivalent to being the entrepreneur with vision who started the business: the reason manufacturing that part is so efficient and lasts so long is because I figured out how to eliminate a troublesome step in the process.

Ask each employee in your company what would motivate them, then put in place a development process to address their expectations. You should expect them to provide you with 3 answers. In this way if you aren't able to address their first and second choice, you have the 3rd one to work on. Doing anything else means you're guessing, and guessing what will motivate an employee is worse than playing the lottery.

For me, creating an environment of teamwork, letting them know their ideas and opinions count and that by all of us working together we are successful. Creating a profit incentive plan and changing their pay structure from an hourly/salary to a percentage of involvement/production efforts in the company makes them very motivated to work just as I work: off of a percentage of what I collect for my clients. They are very alive and focused and enjoy their work because they know it is a team effort. As has been said above, giving them verbal Thank You's and small gift cards for accomplishments has gone a long way in creating loyal employees that have buy in. Not every small company can provide the same "benefits" other larger companies can, but you can still do things that let them know that they are appreciated and that you like that they work for/with you! Great question.

Great question Joseph. To add to what other experts have said I'd emphasize giving people the opportunity to grow in some way by giving them more autonomy or responsibility. Ongoing praise for excellent work is a positive thing to do as well. You might also want to ask the employees for feedback on what would make their jobs more fulfilling and motivate them and then show them you care by implementing the ones you can. I also tell leaders that they call they shots, they get to decide whether there is upward mobility or not.

Hello Joseph, "In a small business, there may not be many chances for upward mobility simply due to the size of the company." That is true for much larger and well-managed companies. Some employees must leave to progress in their careers which is not a problem unless, of course, the employer has not done a good succession plan and/or has not kept it up to date. Such departing employees make room for those who are still working their way up which is a good thing.

"How do you hang on to your key employees that are looking for that promotion?"

Promote them or they may well leave and perhaps they should leave.

Well done everyone... There are a lot of great suggestions and responses to the question above but there's one I haven't seen. That's helping employees of small firms realize that they have more control than they may realize over creating the future advancement opportunities they seek for themselves. By contributing and helping the company succeed, growth will occur as will the need for new positions and managers - advancement. It relates to "helping employees see they're part of a bigger picture" mentioned above but this message more clearly communicates the employee's own ability to influence the creation of the upward mobility they seek.

1. Provide and/or enable them for ownership of the process (oe empowerment)
2. Limit the cross functional of business flow (conflict avoidance)
3. Avoid "curtain walling" in the work process (i.e The unparrallel update of software platforms duirng implementation, most employees arent born yesterday to notice such conditions)

I think Tim Rutledge, Jim Watson and John Anderson have pretty much said what I would say. People need to feel as if they have a value and as Tim mentioned, not everyone wants to climb up the ladder - they just want to do well with what it is they're doing. I like how John mentioned being truthful up front. No point if offering the world or setting up false expectations - if there isn't a lot of upward mobility and that's what people want - well then it's probably not a great fit right now.

Lots of good thoughts and ideas, I like Glen Marshall's best. As a business owner and consultant to other small business. It's about understanding what is important to the employee. The questions indicates this person wants to move up so they either obtain some kind of incentive or they leave.

First choice, if they are that good and valuable, special projects and possible new ventures. Just met with a CEO yesterday in their newest off shoot started by an upcoming researcher that helped them into a new market which they are now dominating. The researcher is not running the new venture, but is an important part of their new business development team.

Have the key talented people drive new ideas to expand the business, now you have upward mobility available.

Great question and so important given our current economy - and less opportunity to "move up"

If you want to motivate - you have to create a culture or environment of motivation - that is all you can offer - people motivate themselves...

1. Purpose - people need to know and understand what they are working for

2. Expectations - people need to know what you want or need them to do - or how you can contribute to the purpose

3. Accountability - funny word for motivation but it is key - people want to know you notice and that you care and that you notice what they are doing

4. Communicate - short, consistent and valuable - to them not necessarily you

5. Relationships - provide opportunities for people to work on task forces, and projects with their co-workers - people need and want relationships - encourage that at work..

all the above remaining valid, have you considered company development ownership? what I mean is that there may not be possible upwards moves, however there may be "horizontal" strecthes in both form and content of job, bringing in new avenues for the company AND for the personal development of the individual. This is the "advantage" of smaller organisations.

Let them go!