May the best get a $5 coupon? Can rewards boost employee performance?
Every once in a while you will hear about it or read about it – do workplace rewards affect performance?. People are divided – do rewards drive performance by creating a competition, or do they have an adverse effect, cooling down motivation?
Today’s talk of the workplace puts a huge emphasis on corporate culture as a motivator. They speak of employees that are moved by emotion, aware of their surroundings and often have higher demands from the workplace and its culture. How do old-fashioned rewards fit in this world? Luckily, there’s some very interesting on the subject:
Money, gifts, or a pat on the back?
In a research held by Liad Bareket-Bojmel, Guy Hochman, and Dan Ariely, the three have shown that employees react differently to different types of rewards. Their field experiment was held at a semiconductor manufacturing factory, where employee performance is measured by their personal production rate.
Their results showed that rewards – cash, coupon or recognition – work. But that there are some interesting after-effects of rewards, effects that may cause many managers to think twice before applying them.
In their experiment, three types of rewards were offered to the employees who win a daily performance competition:
- a monetary reward ($25 in cash)
- a family pizza meal voucher (with a $25 value); and
- positive feedback (verbal reward/ recognition)
In all three cases there was a slight performance boost before the reward was given (i.e. when the competition was still ongoing). But when the reward was cash, or the pizza voucher, performance actually dropped immediately after the reward was announced. When the reward was verbal (public recognition), employees performed better.
This result continued thereafter. When the reward program was discontinued altogether, performance dropped in the case of the monetary/pizza rewards. In the case of the verbal recognition as a reward, the performance boost consisted.
While these findings may cause one to think there is no value in monetary rewards, that isn’t necessarily the case. The researchers surmise employees also care about the nature of the monetary/gift reward. They want to feel appreciated and not offended by the fact the rewards were perhaps too small. Employers should be aware of the message small rewards sends to the employee. Small monetary rewards may send a message of a controlling or alienating nature, which can explain the drop in productivity when the reward is removed.
What’s important to take away from this is that verbal recognition is never wrong – and that it affects performance in a very real and tangible way.
If you choose monetary rewards, make sure that employees will assign a meaning to them, and assume they reflect the relationship between management and employees.