Many employers struggle with how to motivate employees. We have heard them argue they cannot afford the cost of motivation programs. The truth is, motivation does not require significant expense.
Dr. W. Edwards Deming, the founder of the Total Quality movement, argued monetary awards did not produce lasting employee motivation. Although many people disagreed with him, Deming believed once employees are making a living wage, money does not produce an improvement in employee performance or productivity. It can even become a demotivator if employees do not believe bonuses are awarded fairly or if they begin to look at them as an entitlement.
Financial incentives are often the choice employers make since they are the easiest to implement and require the least creativity. As numerous studies have shown, they are not as effective as other lower cost options.
A recent study reported by New York Magazine examined an Israeli semiconductor manufacturer and its motivation program. Employees were divided into four groups, and on a Monday morning, employees in three of the groups were promised a reward if they met their goals for that day. One group was told they would get a cash bonus of about $30, while another would get a voucher for a free pizza. The third group was told their boss would compliment them with a text message that said “Well done!” for good performance. The fourth group was a control group, so they did not receive a message or the promise of a reward.
Which of these options would motivate you? Which would provide the least effect on you?
After the first day, the results were
Motivation Increase in Productivity (Compared to the control group)
Cash Bonus 4.9%
After one day, money was the worst motivator. The compliment was barely edged out by the pizza.
Are you surprised? So was the employer, but not as much as they were as the experiment continued. After the second day, the group receiving the cash bonus performed 13.2% worse than the control group. Through the entire week, while the differences narrowed, the cash bonuses resulted in a 6.5% drop in productivity. Not only were cash incentives the most expensive option, their outcome was worse than offering no incentive.
While the final numbers for the groups receiving compliments and the pizza declined by the end of the week, they still out performed the control group. This means they were better motivators than doing nothing.
Which technique produced the greatest improvement? Compliments proved to be the best motivator. This outcome should not be surprising, as these results echo those reported by Janice Kaplan in her book The Gratitude Diaries. Her study of 2,000 Americans showed:
- 81 percent of respondents said that they’d be willing to work harder for an appreciative boss.
- 70 percent said they’d feel better about themselves and their efforts if their boss thanked them more regularly.
- Only 10 percent of survey respondents said that they regularly showed their colleagues gratitude.
Wharton Management professor Adam Grant explained in The Wall Street Journal, “Extrinsic motivators can stop having much meaning — your raise in pay feels like your just due, your bonus gets spent, your new title doesn’t sound so important once you have it. But the sense that other people appreciate what you do sticks with you.”
How often are compliments given in your workplace? How often do you recognize the work of others? These results show the least expensive form of employee motivation is the most effective.
It turns out Deming was right after all. We hope you will heed his advice and the results of these studies to improve your employee motivation.