It’s a proven fact: employees who are engaged at work (meaning that they are motivated, committed, and satisfied) are more productive and better at their jobs. And more productive employees mean a stronger, healthier business. One study found that “companies with high employee engagement had a 19% increase in operating income and a 28% increase in earnings per share over a 12-month period.”

Think about it — what could a 28% increase in earnings do for your small business?

The question becomes, then, how can you increase employee engagement?

The #1 Key to Increasing Employee Productivity: Recognition

Multiple studies show that “recognition is highly correlated to improved employee engagement with both the employee’s work and organization.”

Still, before you run out to buy 200 gift cards or throw your staff a pizza party, consider this: your employees may feel more appreciated by something other than gifts, parties, or even cash.

A survey by McKinsey reported that, “three nonfinancial incentives are even more effective motivators than the three highest-rated financial incentives.” Those three nonfinancial incentives are:

1. Praise
2. Attention
3. Leadership opportunities

“Really?” you may be asking. “Could praising someone really be more motivational than a cash bonus?”

Yes, according to Shawn Achor, author and nationally recognized positive psychology research. His worldwide studies of employee happiness and success show that productivity increases by 1/3 simply when employees receive one piece of praise each day.

This is great news for budget-tight small business owners — while cash bonuses may be tough on the budget, a little praise (or a lot of praise) is free to provide, and could pay dividends.

Here are other proven ways to motivate employees and increase productivity.

1. Give Them Attention

Employees are motivated by direct attention from their immediate supervisors and the chance to have one-on-one meetings with leadership. Reward great work with focused time from you or immediate supervisors; not only will this practice make your employees feel appreciated, it will also help you form closer bonds with them, and increase communication between departments.

2. Give Them Leadership Opportunities

Employees appreciate having their work lead to greater opportunities and chances for leadership. Give hard-working staffers the opportunity to take ownership of projects or teams. These can be short-term endeavors or long-term changes; either way, the reward of increased responsibility shows your employees that you notice, appreciate, and reward their work.

3. Give Them Flexibility

The need for autonomy is deep for most employees, and you can help provide autonomy by giving your staff more control over their time and schedules. One study found that “allowing workers to schedule their own hours and manage how they approach work tasks reduced employee burnout.” Telecommuting and flexibility in work hours and arrangements can help your employees take control of their own work for greater satisfaction and productivity.

4. Give Them the Chance to Use Their Strengths

People like doing what they’re good at; still, business owners don’t always think in terms of emphasizing employee strengths. All too often the focus is simply getting the work done. Changing your mindset to a strengths-based one is worthwhile: businesses “that have adopted a “strengths-based approach to to individual development have seen the greatest gains in employee engagement, and hence productivity.”

Try some of the methods above and note how your employees respond. You may find that some employees respond well to verbal praise or group recognition, while others value one-on-one meetings. Whatever you notice, implement it. Because if we’ve learned one thing, it’s this: happy employees are the ones who will help build a successful, growing business.

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