Maintaining Morale

Previous: Communication

Unless you’re aware of the likely consequences of your decision or the situation is legitimately unpleasant, absolutely any changes can make-or-break an organization’s morale.

  • Depending on how you came into the role and what the members imagine you’ll do, your presence will both motivate and demotivate them.

In practice, healthy member management is hands-off, a bit like gardening.

  • You can keep adjusting and tweaking small things, but anything dramatic will send at least some of the workers into a temporary state of shock.
  • Too many changes all at once will make them feel uncomfortable, and their work will suffer.
  • If you keep making changes after you’ve done too much, they’ll leave.

Informal mentoring is far more effective than formalized mentoring to create results.

  • They should be coming to you with questions, or you’re likely lecturing them about something they either already know or don’t care about.
  • If you have a tendency to give unsolicited input, encourage them to interrupt you if they don’t want to hear it.
  • If people feel valued, they’re more likely to share the organization’s vision.

Conditioned Response

The most direct way to manage is through giving incentives for good things and discipline for bad things.

  • Your immediate responses and habits with subordinates feed directly into the work environment’s culture.

Stay vigilant over what you can control when you make decisions.

  • Sometimes, you can control workers’ constraints (e.g., firing, docking pay) but not freedoms (e.g., break time, more pay), and other times it’s the other way around.
  • Ideally, you should be able to both incentivize and punish equally, but stay cautious over overusing them if you have one more than the other.
    • Every disciplinary action should have an equivalent reward, and every reward should have an equivalent discipline.
    • e.g., if it’s harder to fire someone than hire them, you must be very picky when interviewing.
    • e.g., if you can give pay raises but can’t dock pay, you must be very careful with giving raises.

When things are going well, deliver lavish rewards and severe punishments.

  • Your disciplinary actions should never surpass the scope of your rewarding actions.
  • Do not deliver rewards publicly if others weren’t able to achieve them as well, or everyone else will feel it’s unfair.
  • Don’t deliver punishments publicly, or that person will feel it’s unfair.

When the financial situation is not going well, cut back on both rewards and disciplines.

  • Removing existing rewards is a type of collective discipline, weighted heavily toward the highest achievers suffering the most.
  • Stay brutally honest when the situation isn’t going well, or the members will resent you for not telling them.
  • Only make promises you can keep, and avoid agreeing to what you can’t predict.
  • If times are hard enough, the best workers will leave.
    • Postponing information to get more work out of them is unethical.
    • Depending on your situation, if things get harsh enough, you should leave too.

Be Competent

A manager delivers the greatest direct motivation through 2 things:

  • Working harder than the members.
  • Personally caring about their success.

Managers will go very far if they can master the skills for being a decent human being:

Workers are highly motivated by competence.

It’s impossible to fake it with anyone you’d want to manage.

  • Even if you’re competent in a different area than your subordinates, your natural expertise and continued education will subliminally demonstrate itself.

However, sometimes you’ll never be competent enough with some people.

  • When someone is very qualified in a specific domain, it’s not uncommon for them to think they’re better than everyone else.
  • Unless you need them for extremely important and hard-to-find skills, it’s wiser to judge their performance on how any untoward behavior affects the rest of the team.

Understand Their Motivations

Every person has a different set of motivations.

  • Even when everyone has the same goals, the reason for accomplishing those goals can be vastly different.

While money is always a great incentive (especially in comparison to their peers), it can’t be the only motivator.

  • Great workers will never feel their well-paid enough when working under a bad manager.
  • They need a balance between achievement and challenge, where they both feel they’ve succeeded but also see more room to grow.

Many motivations depend heavily on personality:

  • Openness to Experience
    • High – the novelty of the work, free time to explore and learn new things
    • Low – the steadiness of the work
  • Conscientiousness
    • High – the achievement of the work itself, exclusive responsibilities over tasks, well-ordered systems
    • Low – the opportunity to be done with the work and relax, a lack of structure
  • Extraversion
    • High – the opportunity to be with people, opportunities for advancement or promotion
    • Low – the opportunity to be alone
  • Agreeableness
    • High – social recognition for completing tasks, social experience in making plans, freedom to fail
    • Low – the chance to engage in a conflict
  • Neuroticism
    • High – fun and exciting experiences
    • Low – consistent experiences

Openly ask them directly what they want.

  • Most people don’t feel comfortable approaching their managers to ask for a pay raise or additional benefits.
  • Everyone has unique preferences, and they usually don’t volunteer to tell you them.
  • However, make sure to followup on any ideas they provide, or they may resent that you didn’t act on them.

However, some things always discourage people from working:

  • Stifling organizational policies or needless bureaucracy
  • Over-involved supervision or any conflicts with the leadership
  • Unhealthy relationships with peers
  • Unsafe or needlessly uncomfortable work environment
  • Salary/benefits feel inadequate
  • The work itself is considered menial or beneath them
  • Little to no job security, or the work is wildly inconsistent
  • Unclear direction about what to do or why it matters
  • Very little confidence in personal ability compared to peers

Waning Motivation

Over time, every new member will slowly become less motivated toward the team’s interests.

  • When they start, their imagination about the opportunities within the team are endless, but that fades as they gain more understanding about their team and their limits.

Everyone loses their dedication to the group along a relatively straightforward pattern:

  1. Ambitious drive to succeed in the group.
    • Motivated to accomplish within the group and make a change.
    • This ambition is generally proportional to age, with older members’ motivations subdued by bad past experiences.
  2. Burnout or disenfranchisement from working too much for what feels to be too little reward.
    • General cynicism from tasks that feel unrewarding.
    • Works frantically until exhaustion, then vents about it later.
    • Too much stress means they’ll still perform tasks, but out of duty more than passion.
  3. Increased hostility in the work environment.
    • Project goals or customer service are no longer a priority.
    • No longer doing favors (e.g., staying later, coming in early, taking on extra projects).
    • Saying “that’s not my job” for anything not specifically in the job description.
  4. Decreased professionalism in the workplace.
    • Doesn’t respect management anymore.
    • Uses peer pressure to discourage more determined workers.
    • Gossiping about others not present with them.
  5. Complete disengagement from the work.
    • General apathy about work quality or deadlines.
    • Behaving as if they’ve accomplished enough and no longer need to work anymore.
    • Consistently calling off work, not coming in, or taking days off.
    • They stay in the role and “quiet quit”, doing just enough work to not get fired.

This progression of dissatisfaction can be slowed or restarted, but never stopped.

  • Making effective, dramatic organizational changes can restart the experience for them.
  • A pay increase is effective to inspire loyalty again, but typically not as much as a larger organizational change that more directly rewards hard work.


There are plenty of reasons people leave:

  • They don’t see more opportunities for growth or professional development.
    • The job isn’t what they expected.
    • They feel a mismatch between the position and the tasks.
    • They don’t feel they received enough feedback or coaching.
    • They’re not feeling much recognition for their work.
    • Their pay feels insufficient or the benefits are inadequate.
  • They feel disrespected or that management isn’t listening to their ideas.
    • Someone else took credit for their accomplishments or ideas.
  • Others may seem to receive preferential treatment.
    • Work was taken from them and given to other members.
    • Peers received opportunities they weren’t allowed to have.
  • Their values no longer coincide with their leaders’ values.
    • Management’s methods are morally questionable or unprofessional.
    • They no longer trust senior leadership.
    • The organization is poorly managed or has confusing standards.
    • Their personal life is too heavily affected by their work.

People typically leave managers more than organizations.

  • Most people who have issues with an organization don’t work there in the first place.

Have an exit interview to learn why they’re leaving and what would motivate them to stay.

  • While you can give a counter-offer to their pay, you’ll need to make many more changes to keep them motivated to stay for much longer.
  • Gracefully let them go and keep them as a business connection.


The greatest bonus you can give anyone is meaning.

  • People start their own businesses all the time with a dramatic cut in pay and increase in workload because they can contribute more fully to something beyond their paycheck.
  • Find ways to communicate how their decisions and work actually changed others’ lives for the better.
  • If you can’t find anything, you’re either a bad manager or work for a bad company.

However, people are working to get paid, so they’ll never turn down more money.

Often, bonuses can give them more meaning if you grant them without asking instead of through a formalized system.

  • Communicate well in advance to avoid surprises.
  • Start with raises based on merit before giving harder-to-calculate bonuses.
  • Set extremes in the system to more heavily reward high-performers.
  • To make them feel the team’s success, tie a portion of the bonus fund to overall profitability.
  • To stay fair, do not compare employees while reviewing their performance.

Try to foster healthy competition with fun and lightweight non-cash incentives.

  • Not everyone responds well to competition.
  • If people really want it, they may sabotage each other to succeed.

Cash & Equivalents

Pay them extra for staying devoted to a project or attaining critical goals.

Cash bonuses always work, but aren’t the only way to reward people.

  • Some non-cash gifts are more tax-deductible than directly through payroll.
  • Gift cards can be tailored to each person for a more meaningful impact.
  • Try celebrations instead of a reward, which is simply a more fun method of recognition.
    • Lavish celebrations can often become awards ceremony traditions as well.
  • Since it creates mandatory personal time for work, do not meet with them for dinner.
  • Give a company car or car program that provides insurance and maintenance.
  • Give gifts for certain life landmarks like marriage or a new baby.
  • Give them discounted or free insurance.
  • Pay for their financial/investing consultation services, legal assistance, or identity theft protection.
  • Give significant discounts on company products.
    • Partner with affiliates in other industries to share discounts with each other.
  • Give tickets to events like concerts or amusement parks.

To make the money go farther, give many smaller bonuses instead of one large one.

  • Psychologically, we’ll feel more reward from five $20 bonuses than a single $100 bonus.

If you give fixed incentives directly connected to performance (e.g., sales commissions), avoid anything that favors underachievement.

  • Giving inadequate praise to higher achievers or rewarding low achievement will create major dysfunction and dissatisfaction in the team.

To retain top talent, give a yearly bonus that averages the past 3-5 years.

  • If the bonus is an average of the past five years, they’ll feel less afraid of losing all their bonus if they have a particularly bad year and more motivated to try their best anyway.

Help members appreciate each other.

  • Inspire them to thank each other.
  • Give incentives they must give to other members for doing well.


If there’s any chance they’re underpaid, do not give more benefits.

  • They will appreciate a significantly higher paycheck much more than a fully staffed cafeteria and luxurious break room.
  • Pay them what they’re worth first, then think about fun side incentives.

If a benefit is industry-standard, never think of it as a “bonus”:

  • Health insurance
  • Paid time off
  • Designated break room
  • Retirement plans (e.g., IRA, 401(k))

You can often give additional benefits on top of any standard benefits:

  • Surviving spouse insurance
  • Extended parental leave
  • Family and bereavement leaves
  • Substantial retirement plan package
  • Ambitious healthcare coverage
  • Mandatory holidays off or half-day Fridays
  • Allow business travel expenses for personal needs
  • Recreational facilities like video games, pool tables, fields or courts

Give them anything that will make their job easier or more enjoyable:

  • Decorate the workplace with plants and tasteful art.
  • Install a nap room, shower, or pay for their lodging.
  • Arrange for free or discounted productivity and management software for their personal purposes.
  • Let them bring pets to the office.
  • Pay for their commuting costs, or simply let them work from home.
  • Provide childcare.
  • Have free food, juice bars or unlimited snacks available.
  • Hire an on-site masseuse.

Give them the means to grow on their own:

  • Fill the organization’s library with multiple copies of business and self-help books, then encourage them to take whatever they want.
  • Provide educational reimbursement or a subscription to a professional development service.
  • Pay for them to go to career-relevant conferences and conventions.
  • Give them paid time off to improve their professional skills.
  • Give them privacy to achieve results at their own pace.
  • Give them access to the professional network beyond your current team.
  • Open them to temporary projects in different team roles they’re curious about.
  • Give a few hours each day or up to 20% of their time to explore side projects at work.
  • Let them be part of an exclusive organization or club, even after they leave the company.

Provide support for them to have a healthier lifestyle:

  • Pay them for personal philanthropic time.
  • Enroll in a wellness program (e.g., counseling, substance abuse).
  • Establish an on-site gym or give incentives for weight loss.
  • Give unlimited vacation days or flexible hours, or simply don’t track their hours at all.
  • Fund an adoption assistance program.
  • Furnish a family resource room with books, toys, games, and educational material.
  • Provide breastfeeding/pumping equipment.

Never give something and then take it away.

  • We hate receiving something and then losing it later much more than simply not having it in the first place.
    • One of the most immoral ways to conceal it is to hire someone who can remove a benefit or cut pay, then dismiss them after they’ve removed the incentive.
  • The benefits may not attract the highest-possible talent, but they’re guaranteed to stick around for longer.

Managing Conflicts

Most conflicts are inevitable, meaning your best option is to let most of them play out.

  • Getting involved in conflicts the wrong way, however, wastes your time and theirs.

Keep your position in mind whenever confronting anyone.

  • If you intercede to mediate, you’re typically not an unbiased third-party and more along the lines of being an official arbitrator.
    • Your arbitration begins when the consequences of their conflict affects the interests of you or the team.
  • When you get involved more than you should, members will typically try to lobby your opinion to their side of things.

Always assume every conflict might be worse than it appears.

  • Over-reacting protects against unseen risks, but under-reacting allows risks to magnify themselves.

Set a few ground rules for yourself and everyone before getting involved in a team member conflict:

  1. Everyone must believe the best of everyone else (i.e., nobody is being intentionally malicious).
  2. Information is free for everyone, and anyone can bring up anyone and anything.
  3. The only answers to the conflict must be win/win.
  4. The manager’s presence is only necessary if everyone can’t reach an agreement.
    • They must both present it together as a shared narrative, with their proposed possible solutions.
    • They both must understand why anyone disagrees with each of those solutions.
  5. If the manager gives a resolution one of them dislikes, they’ll have to accept the manager’s judgment.
  6. If anyone doesn’t comply with the manager’s decision, the manager has the authority to enforce their judgment.

Unless it’s strictly fact-based, never take sides with either member.

  • Avoid favoritism at all costs or you’ll quickly develop a reputation for it.
  • Even when you know someone is entirely right, focus more on what that person can prove to be right.

While you may wish for an amicable resolution, that’s only possible if everyone wants an amicable resolution.

  • Some people have reasons to keep a conflict going.
  • Whenever possible, aim for the “win/win or no deal” approach.

Presume that there are no secrets, and that everyone else will hear about the issue.

  • Always get ahead of the story by plainly speaking the simple truth about the controversial events.
  • If you try to hide the problem or stop the spread of information, people will see you as part of the scandal.
  • People tend to be distrustful with authority figures, so expect plenty of bias against any spin you make to the information you know.

Disciplinary Action

Give grace enough for people to fail.

  • You can only lead by love or by fear, and leading through fear is highly limited when the worst thing you can do is fire them (and therefore release them from their suffering).
  • Since everyone makes occasional mistakes, focus exclusively on avoidable or repeated mistakes.

People only feel the consequences of their actions if you directly connect disciplinary action to them, but not always.

  • Taking away anything may provoke them to simply hate you.
  • Foster a stronger culture by having members review each others’ work.

Never give punishments before withholding incentives.

  • The scope of incentives you can give and take away is far greater than the scope of disciplines you can take beyond outright firing them.

While you can technically do whatever you want, doing it the wrong way will sow distrust and resentment.

  • Treat others the way you’d wish to be treated if you were in their position.
  • Learn to communicate every unpleasant thing with kindness, passion, sincerity, and gratitude.
  • Deliver orders as recommendations or as a shared need.

Pay close attention to how they’re failing:

  • Incompetent/ineffective
    • They’re often quite happy with the work, but low-performing.
    • They’ll typically be disorganized, passive to act, and resistant to any changes.
    • Inspire them to more effectiveness:
      • Use steady support and extra training.
      • Closely track their performance.
      • Hold them responsible to improve.
  • Lazy/uninterested
    • They’re unmotivated to perform tasks or fulfill deadlines.
    • They’ll usually be uninvolved in significant events at the worksite.
    • Typically no longer interested in advancing their career and will find creative ways to waste time or not show up.
    • Provoke them to work:
      • Give explicitly clear expectations.
      • Perform unscheduled checks on them.
      • Increase their rewards for succeeding.
  • Selfishly overworking
    • Unaware of personal limits, but refuses to hand projects to others.
    • Will competitively undermine other members’ confidence.
    • Direct them to be a better team player:
      • Force them to delegate projects.
      • Directly reward their ability to work with others or delegate.
      • Give them more time to relax and encourage paid time off.
  • Socially distracted from work
    • Unfocused or uninterested in the work.
    • Can be distracting and loud to the rest of the team.
    • Help them to focus more:
      • Consistently redirect them back to their tasks.
      • Clarify what others expect from their behavior.
      • Direct them to more interpersonal tasks that use their energy and skills.
  • Disrespects everyone else
    • Bullies or intimidates peers or subordinates.
    • Manipulates relationships, doesn’t obey rules, and has issues with authority.
    • Give explicit boundaries.
      • Enforce a safe environment and take complaints about them seriously.
      • Carefully document unhealthy behaviors.
      • Trust your instincts about their motivations.

Suppressing Rumors

People tend to gossip, especially when they’ve become comfortable in a role.

If anyone starts bringing up rumors about any misbehavior:

  1. Pull them away in a private conversation.
  2. Ask specifically what they’ve heard.
  3. Have a pre-determined plan for what you will do for that action you’ve heard, no matter who it was.
  4. Ask for names.
  5. If they don’t want to give names, for whatever reason:
    • Give them a piece of paper, and tell them to write down names.
    • If they can’t, candidly state you can’t do anything.
  6. Either way, publicly communicate (without names) that you’ve heard that rumor, and the consequences if they’re found out.
  7. If the person bringing the rumor seems to keep spreading baseless rumors, consider that action as possible grounds for termination, which may include updating the organization’s policy.

Unless you have an action item attached to specific behaviors (which affects specific people), nothing will happen:

  • Unless they know confessing will be better than persisting in their action, general statements to everyone condemning the action typically informs the guilty people to hide their actions.
  • Any policy or procedure that formally punishes the action must be followed to the letter, and for everyone, or it won’t be easily enforceable.
  • Ignoring the offense or figuring people will sort it out amongst themselves typically makes it worse.

Handling Crisis

Handling emergencies is a critical part of management.

  • Most people don’t handle crisis and hardship well unless they’ve experienced it before.
  • Even when people typically know what to do, they often need direct guidance in a difficult situation.
  • Always assume the crisis might be worse than it appears.

It’s worth having at least some contingency plan for most of the common crises you may face:

  • Specific conflicts among workers.
  • Natural disasters in operational regions.
  • Failures by members or yourself.
  • Failures by another team or organization your team depends on.

While you can’t be prepared for everything, you can foster a culture that endures challenges.

  • Welcome open discussion of conflicts as they arise to avoid long-term resentment.
  • Invite constructive criticism to foster change before it’s necessary.
  • Don’t simply debate: make clear decisions after everyone has voiced their issues.

If there are severe risks in the work, train everyone for perfection.

  • Have them practice tasks, then have everyone else find flaws.
  • Train them as much as possible in a low-risk environment (e.g., simulations).
  • Grade what they know, how they perform, and how they perform under severe constraints.

Never let yourself become complacent or conceited.

  • If you aren’t prepared to accept anything, you’re letting the entire team down.
  • Always check whether you’re showing favoritism or unfairly employ bias.

Work-Life Balance

There is no work/life balance, since life is the domain that work is meant to support.

  • While it benefits you for them to work more, they must accommodate it with the rest of their life.
  • Asking too much of them can either foster burnout or instill a workaholic culture.

Never exercise more authority than you need.

  • Unless the work demands fixed hours, let them define their hours.
  • Make mandatory no-email weekend days and evenings that force personal time.
  • Unless you’re aspiring for a specific image with customers, let the dress code sit at semi-casual or casual clothing.
  • When you permit them to have the internet or their personal mobile devices, you should also let them use social media.
  • If they want to and it harms nobody, let them bring their personal effects into the workplace.

Unless they insist, do not let them regularly work late or on weekends.

  • Generally, additional work gives much less cost-wise than hiring new workers.
    • Overtime pays time-and-a-half (150% the pay), while they’re also tired (at 75% productivity), meaning you pay twice the normal rate.
    • Extra overtime pays double-time (200% the pay), while they’re also exhausted (at 50% productivity), meaning you pay a quarter the normal rate, and often with lower-quality work as well.
    • After 13 hours of staying awake, people produce the same results as if they were drunk.
    • Further, exhausted teams have far less patience with each other, which will increase the risks of interpersonal conflicts.
  • Focus more on efficiency with the time they already have than on persevering for longer periods.
  • If the workload is particularly severe, get temporary or part-time workers under the full-time workers’ supervision.
    • Often, overwork to make up for lost income can create a vicious cycle of overworking until burnout.

Next: Changes, Scaling & Shrinking