Motivate Your Employees By Eliminating Monetary Rewards

May 29, 2013 - 7 minute read - Posted by

Last time, I wrote about completely taking compensation out of the equation when it comes to performance reviews. Included in the post was Dan Pink’s Ted Talk on The Puzzle of Motivation where he pushes the idea that autonomy, mastery, and purpose are the real motivator behind excellent performance, NOT money. I was browsing through today, and fell on this great article by Meghan Biro who talks about decoupling financial rewards from recognition. The article answers the question that many managers ask us when we introduce 7Geese to them: “How do you link rewards to recognition?” I would like to share why coupling rewards with recognition may hinder your employees’ performance and how to still recognize your employees’ contribution in a meaningful way.

Gen Y employees are yearning more opportunities to learn and grow rather than focusing on salary. Many organizations still employ the archaic method of giving out a tangible reward for their employees’ contributions. These types of  rewards work really well for duties that are repetitive, do not require much mental effort, and are short term, but not so much for work that requires creativity.

I want to share with you a personal experience which may sound trivial, but demonstrates my point well. In a prior work setting, recognition and rewards were joined at the hip. The first time I was recognized for my work, I received a $10 gift card for Starbucks. Of course, I was ecstatic, “This is the best workplace ever. I work hard and get a gift card!” (NOTE: a $10 Starbucks gift card goes a long way for a university student). I started to think that the harder I worked. the greater the reward would be. However, the next time I got recognized, I was rewarded with a bottle of nail polish worth $6. It was a complete bummer for sure; why is my effort being valued less now? It was even worse when compared to other co-workers; why are their efforts worth more than mine? My performance lowered because I felt that my contribution was being valued less. This is an example of how monetary rewards can quickly turn a positive into a negative.

Many companies panic at the thought of removing the tie between financial rewards and recognition. Their first thought is, “How are we going to show our employees that we recognize their contributions if we can’t give them something tangible?” The answer is to go back to the roots of giving recognition – recognizing your employees is a way for you to tell them “I care about your success, I value your effort in making our company successful, and I appreciate your dedication.”

People crave positive feedback and acknowledgement from their leaders and peers. This warm feeling of being recognized for work that you have put your time and effort into is priceless. Abraham Maslow, the psychologist famous for developing Maslow’s Hierarchy of Needs, teaches that people will first satisfy their most basic human needs. Once these are met, they move on to more interpersonal needs, such as esteem and belonging. Providing a compensation package which matches the industry average meets people’s safety need – safety for employment, health, and future retirement plan. But when that need is met, people search for esteem – self-esteem, achievement, and respect by others. A successful recognition program provides employees a way to satisfy these important higher-level needs.

There are several tips you can use to provide your employees with recognition that they will value:

In the moment – Be timely with your feedback and recognition. Think of yourself as a sports coach. Don’t wait until the end of the season to tell your team how they did. Whether it is positive or constructive feedback, your employees will have the opportunity to improve as of that moment. Also, feedback and recognition in real-time increases employee engagement at the workplace. If an employee finishes a project in the morning, giving immediate feedback can help motivate the employee to be engaged throughout the rest of day.

Authentic, not automatic – Show your employees that you know exactly what they did to contribute to the success of the project. Be specific and descriptive. Take the time to write a personal note with the recognition. This will tell your employees that they are not just a human body working for you, but they are part of your team. For example, Sheldon Yellen, CEO of Belfor Restoration, hand-writes birthday cards to every single employee. His deep caring for his employees has positively influenced the corporate culture.

In context – Link the recognition to the company’s bigger goals and core values. Explain to your employees that their effort is not only contributing to their team, but also to the overall success of the organization. You want to make them feel part of the team. For example, “You rock for making cookies,” means nothing to an employee compared to “We thank you for making the cookies as it gave the team good energy to work through the night, which ultimately allowed us to finish the client’s project before the deadline”. You want your recognition to help your employees have a clear line of sight on how their contributions benefit the organization.

Not everything revolves around money. By recognizing your employees for their accomplishments and not putting a dollar amount on their contributions, you are giving them the gift of esteem. In return, you will definitely get higher employee engagement and retention.

Be the leader in rocking your employees’ recognition program without tying it to financial rewards.


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