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The Link Between Morale and Performance

A lesson only just being learned by the health service

Written by: Andrew Vincent, Medicology Ltd. Published: 3rd June 2010

When there is generally strong acceptance that happy, motivatedemployees produce the greatest levels of performance, why dohealthcare organisations place so little emphasis in this area?Some organisations may feel that this is an over-generalisationbut even those who consider themselves mindful of employeemotivation and morale tend to approach the subject verydifferently from their commercial counterparts. This articleseeks to raise awareness around the importance of a motivatedworkforce, as well as highlight some of the dilemmas existing inthe Public Sector.

The Imperative to Consider Morale
Over the previous five years investment in the best companiesto work for would have generated a compounded annual returnof 12.1%. When compared with the FTSE All Share Index, whichactually declined by 5.8% over the same period, it seems thatemployee motivation and morale produce better financialreturns. Many will dispel this as incomparable to the publicsector because profit is not the primary motivation. However, wewould argue that whatever the ‘purpose’ of the organisation, theproductivity of the workforce is its key to success. In our currentlyturbulent economic times, this becomes even more important at acommercial level, with companies asking employees to genuinelyunderstand that the future is their future, with no second placesor even a point to blaming when an organisation goes intoliquidation. The health service, like most public services, has neverhad to face this harsh reality ...yet.

At the recent NHS Confederation Conference, Andy Burnham,Health Secretary, warned that the NHS could well face real timeshortfalls of between £8 and £10 billion in the three years beyondthe 2010-11 financial year. David Nicholson CBE, Chief Executiveof the NHS, warned of real time cuts, despite political assurancesand suggested that all provider organisations needed to get theirhouse in order early. Against the backdrop of ever increasingdemand, it is predictable that provider organisations may well seefactors that contribute to employee wellbeing and satisfaction asluxuries or nice-to-haves, often first to go under the banner of costimprovement. However, with tightening purse strings, increaseddemand and increased competition, employee motivation andmorale will likely prove one of the important indicators of bothsurvival and thriving in the modern health economy.As if to echo this thought, Dr Pete Braden, Head of Research atBest Companies Ltd, the organisation behind the Sunday Times100 Best Companies to Work for, says “There will be winners andlosers and, five years from now, the top 100 lists will be dominatedby companies which have not just maintained but improved theiremployee engagement in difficult times.”

The Incentive Trap
It is possible that the core issue lies in the use of public money. Isit ethical to use public money to incentivise workers to performbetter? We would argue that if this is what it took to producebetter performance the expense is justified, in the same way thatyou would justify paying for training if it produced the goods.However, we also think this misses a vital point; that in the publicsector and health in particular, the primary motivators are notmoney and consequently, pay is of less consequence than some ofthe less tangible factors such as involvement or contribution.

The danger here is to think that your ability to affect motivationis directly linked to incentives. The lesson against this is anotherpublic sector one. Prior to turning up the heat on health, thisGovernment sought to increase performance in the educationsector by incentivising teachers with substantial sums, bothin basic salary and in performance-related pay. Rather thanproducing the gains anticipated, if anything it accelerated anexodus of good teachers who felt that their caring, nurturingprofession had been turned into something distasteful that itwas never designed to be. The intelligent onlooker would haveobserved that if you were motivated by money, why would youhave ever gone in to teaching (or nursing, for instance). Whenconsidering motivation and morale, it is important to consider thatdifferent people are motivated by different things. Just becauseyou are a financially-motivated, power hungry politician, doesn’tmean you can apply the same motivational principles to peoplewho joined health as a source of intellectual stimulation and inwhom there is strong motivation towards doing the right andhelpful thing towards patients in need.

What Makes Motivation & Morale?
There is a great deal of debate about what factors ultimatelycontribute to someone’s overall motivation. Where’s employees ofthe 100 Best Companies obviously represent strongly motivatedindividuals compared to the average, it would be wrong not toacknowledge that organisations that aren’t good to work foralso have individuals within them that are well motivated. Whatfactors drive these people? Arguably, understanding this would bebeneficial to the health service, especially as it enters a period offinancial famine.

The 100 Best Companies uses an 8 point analysis to determinewhere in the rankings and employer sits. This is perhaps a usefulstarting point as collectively we can agree that performance inthese factors determines how good a place is to work which inturn determines better performance than the FTSE All Share Index.Those factors are:

Another theory that holds academic weight is that of ‘equity’ (Adams1965) or the match between what an employee does and what theyperceive as fair, judged by a variety of factors from pay, to whatcolleagues do, to how much an employer seems to value them. In effectthey compare ‘inputs’ or what they do with ‘outcomes’ such as pay, otherrewards and comparisons. Motivation is highest where a person’s inputoutcomeratio is similar to that of their co-workers. Ironically, where aperson’s outcome is very high, for instance in pay, they can becomede-motivated through guilt – an important lesson for those trying toincentivise public sector workers with higher financial reward!

Making Sense of Morale
The tricky issue here is that everyone is influenced by different factors.For one person, financial reward may be an overriding driver whereasthe next person may find too much financial reward embarrassingand de-motivational. However, what we can conclude with reasonablecertainty is that:

• Measuring composite ‘morale’ is a blunt instrument that tells younothing about what makes it up for an individual, which is whatyou need to know for it to be useful
• Determining a ‘score’ for a factor without determining the relativeimportance of that factor for the individual is a bit like handing outfree £10 notes in the High Street – everyone seems to want onebut you can’t tell whether it’s because they want one, need one orthey’re just putting their hand up because everyone else is
• To use morale measurement to lead performance improvementmeans resolving the first two issues

Essentially, morale for an individual is made up of a series of factorsthat are important to them (the individual), possibly very differentfrom their co-workers and to which they compare desired minimumdelivery against that factor with actual delivery. Where the reality isbelow where it needs to be as a minimum, they experience a negativemotivational force i.e. become de-motivated, and where it is greaterthan it needs to be they experience increased motivation. It is thecollection of these positive and negative forces that equate to overallmorale.

The Best versus the Rest
High performance organisations don’t leave employee morale tochance. Instead they recognise that they can achieve the highest levelsof performance, be that financial or otherwise. The rest tend to feel thatmorale is more a matter of circumstance and not something theycan fundamentally influence or indeed have the moral authorityto engage in. However, this is probably why the best are indeedthe best and the rest struggle to catch up. What is undoubtedlytrue is that without an accurate measure of morale, carefullyconstructed to account for individual differences, the task ofimproving it is very much like shooting in the dark. Any one forfree £10 notes?