Numerous studies have shown time and again that money is an extremely poor motivator. Drive: The Surprising Truth About What Motivates Us is a well sourced book which dives into the topic. The author, Dan Pink, has a really nice animated version of a talk he’s given summarizing the findings.
While monetary incentives are a poor motivator, instead people are primarily motivated by Autonomy, Mastery, and Purpose.
Autonomy — Our desire to be self directed. It increases engagement over compliance.
Mastery — The urge to get better skills.
Purpose — The desire to do something that has meaning and is important. Businesses that only focus on profits without valuing purpose will end up with poor customer service and unhappy employees. [wikipedia]
Based on your description, it looks like the company has a lack of Autonomy and Purpose (your question doesn’t mention much relating to Mastery).
The employees aren’t self-directed and in control of their own fates. They’re being asked to work overtime because things are off schedule, again cutting into their autonomy.
They likely don’t feel like there is much purpose to the work they’re doing, which is evidenced by their resistance towards additional overtime.
So, how do you solve this problem? There’s no “easy fix” and no “one size fits all” approach. Especially as you’re already between a rock and a hard place.
It may help to communicate the reason behind the contract, what it means for the company, what it means for the customer, what it means for the customer’s customers, etc. There may be some employee engagement activities you can organize to help them understand the reason their work matters. This can’t be superficial, or trite either, that will backfire. Honestly, the company/project purpose needs to be defined and ingrained in the culture. If you have done that yet, now it’s the time to start, but don’t stop as soon as the current fire burns out. (Thanks to the commenters for pointing this out)
It may help to solicit feedback from the employees about how to proceed. Give them an opportunity to right the ship themselves. You likely have a bunch of smart people who understand the work, customer, environment, etc. and likely have lots of ideas they may not feel comfortable sharing that could help.
If you’ve been running in overtime mode for a long time, it’s quite likely that things like new opportunities, moving teams, changing technologies, etc. are being sacrificed in the misguided notion that “we don’t have time for that”. Happy employees are always better, more productive employees.
.. Perhaps if managers were held accountable for agreeing to unrealistic customer requests and you consulted your workforce about whether they’d agree to perform some overtime to help the company before agreeing to customer demands, the employees would feel more like team players. – David Schwartz 2 days ago