You can't run a business and not notice there are certain things that suck the life out of your employees. LAck of raiseds, fear of being laid off permanently, etc. One thing I have always found managing other employees in my observations are that managers tend to make the mistake of promising thisng they aren't sure of. Things such as telling employees they are not going to have to work overtime on Friday with a notice on Monday and then telling them Thrusday that they do indeed have to come into work that day. This of course would be for employees that work 4 10-hour shift work weeks. These kinds of things are great when they are actually true. Never, ever take something away from an employee that you promised them they would have. Managing employees is as much about psychology in how you handle them as it is about actually being competent at being their manager.
Did I actually tell you what the biggest motivation killer is already? Not if you go by the reason I started this post. In fact it is something that every employee thinks about subconsciously, and a few actually state blatantly when the observation is made. It's that people are not motivated to help the company. They are motivated to help themselves. This is just common sense to most. I care more about a .50 cent raise that covers my weight loss pills for the next year than I do about some exectutive's stock price going up 1/4 of a point. I work for myself. IF I don't get rewarded for working harder, and only the company does, what is my motivation to actually work harder?
Tha tabove paragraph is lined with thoughts from the movie Office Space. One of the most brilliant movies ever made in my opinion. One quote sums it up to me: "It's not that I'm lazy, it's that I just don't care. I could work my ass off so that my boss' stock will go up a 1/4 of a point, but I don't see a dime. Where's the motivation?"
Take a look at this subject discussed in depth here as well as some options to help you understand it, and to help bring back motivation to the work place.