Whether you are trying to decide which rewards to offer in your an existing incentive program, or you’re thinking about implementing a program for the first time and are overwhelmed by the various options; the decision about which incentives to use is critical. As such, which rewards you select should be guided by the science on human motivation. Unfortunately, most managers take a less scientific approach, by making assumptions.
Here’s the problem with making assumptions: The most recent psychological research shows that human beings are horrible at predicting which sorts of things we would ideally appreciate in the future. And even when we do predict what we ourselves would want, projecting our personal tastes onto a diverse workforce isn’t necessarily a good idea.
The good news is we don’t have to rely on assumptions to find the best incentives to achieve your desired outcome. There’s a considerable body of research about what motivates us, and how to apply it to employee incentives in the workplace. But before we reveal what the science of human motivation has to say about incentives choices, it might be good to look at the common wisdom.
4 Assumptions We Usually Make, but Shouldn’t
1. “If you want to change employee behaviour, reward wanted behaviours and penalize unwanted behaviours.”
But the research shows: Simple operant conditioning theory of positive reinforcement is a more successful means to change employee behaviour instead of penalize negative behaviour. Incentives programs need to focus on things like recognition, presentation and timing, as well as the actual incentives themselves.
2. “A dollar is a dollar; employees will treat any incentive (direct deposits, cash, gift cards, etc.) as ‘money’ and value them equally.”
But the research shows: A dollar is not a dollar. Employees treat different kinds of incentives differently, and might prefer one type over another of equal “value.”4 Take cash in the form of a direct deposit, for example. This kind of reward often ends up being spent on essentials, and so gets lost in the monthly budget.5 The best incentives grab attention, evoke positive feelings and manage to be memorable.6
3. “High performers don’t need (or rather, shouldn’t need) ‘extra’ motivation.”
But the research shows: High performers are good at motivating themselves, but can quickly tune out if not given positive feedback and personal engagement. Fairness is a factor here, too. If low performers are given incentives to boost their performance, high performers will also want them.
4. “Extrinsic rewards can actually diminish one’s internal motivation.”
But the research shows: There’s a complex interaction between external rewards and internal motivation. While there are some specific circumstances where external rewards can diminish internal motivation, there are many cases where both can be used to successfully motivate employees. And in some cases, the external motivator can actually enhance the internal ones.8
4 Vital Aspects of Effective Employee Incentives
Properly structured incentive programs can increase employee performance by as much as 44 percent9. So what are the qualities of a good employee incentive? The right incentives should be:
If you want to change behavior, it’s not enough to provide monetary incentives and invoke good feelings. Employees have to “remember the good times.” If they can recall the occasion of a reward more easily, they’ll draw the association between work and those positive emotions more frequently.10
Rewards related to experiences are a great way to do this, as they engage multiple senses and create an emotional reaction that you can’t get from other rewards. More than that, experiences help to create stories, which the human brain is wired to compose, remember and share. A reward or recognition ceremony that lends itself to a story is more likely to be retained. Don’t discount the element of surprise with rewards, either. Rewards and recognition mean more, and are talked about more, when employees aren’t expecting them. Surprise and delighting your employees for a job well done with a gift card for a dinner with their family or night out with their spouse, will be remembered fondly and for much longer than an annual lump sum.
Excuses to indulge in luxuries are a powerful motivator. This is at the core of what’s known as “justifiability theory.” Justifiability theory recognizes that people plan how to spend their money, and unnecessary purchases beg for justification. The larger the purchase, the better the reason needs to be for spending that money. This means that cash rewards get spent on utilitarian things like bills or household necessities, quickly losing their reward luster.
But tangible incentives, such as gift cards, are seen as luxuries, so people tend to value them more as rewards. A well-designed rewards program makes the luxury inevitable while removing the guilt of enjoying it.
Meaningful incentives show that management cares. This not only has long- term effects on the company culture, but can provide short-term boosts to productivity as well. This effect actually has a name: the Hawthorne Effect. The change comes because employees become aware that management is taking an active interest in what they’re doing.13 If small changes can spur a small boost in productivity, highly meaningful changes can produce large boosts in average productivity.
Rewards not only motivate employees to work harder; they also provide an opportunity for feedback on performance. The rewards then act as honest feedback about the employee’s performance, and positive behaviors are reinforced. Smaller, more frequent rewards serve to fight negative emotions such as envy in the workplace.14 Frequent rewards also avoid decreasing marginal return. The average employee can easily see a huge difference between a $10 gift card and a $50 gift card. But few would notice the difference between a $2,000 vacation package
and a $2,040 package. This means that smaller, more frequent rewards provide much more leverage per dollar spent. Every extra dollar put towards such incentives will have a much larger impact on the employee and their behavior.
About Hawk Incentives
Hawk Incentives, a Blackhawk Network business, delivers incentive programs that build relationships with easy-to- use platforms, global rewards and comprehensive service and support. Our solutions include consumer, sales, channel and employee incentive programs. With a focus on access, ease, rewards and speed, we help create a better incentives experience that helps our clients grow their results. Hawk Incentives, headquartered in Toronto, Ontario, is a division of Blackhawk Network.
- The Role of Work Context in Work Motivation (Wright 2004)
- Getting More Work for Nothing? Symbolic Awards and Worker Performance (Kossfeld and Neckermann 2011)
- Reward Fairness (World at Work2011)
- The Benefits of Tangible Non-Monetary Incentives (Jeffrey 2009); also Incentives, Motivation and Workplace Performance: Research & Best Practices (IRF 2002)
- Wirthlin Worldwide Survey (1999), reported in Scientific Studies Highlighting the Benefits of Tangible Rewards Over Cash
- Small Rewards Can Push Productivity (Gale2002)
- Job Performance Not a Predictor of Employee Engagement (Murphy 2013)
- Negative Effects of Extrinsic Rewards on Intrinsic Motivation: More Smoke Than Fire (Ledfort, Garhart, Fang 2013)
- Incentives, Motivation, & Workplace Performance (Incentives Research Federation)
- Thanks for the Memories: The Effect of Reward Recall on Perceived Organizational Support (Jeffrey,Silbert Nummelin, 2007)
- Emotion Can Heighten Memories (Nauert2012)
- Natural Born Cyborgs? (Clark2001)
- The Hawthorne Effect (The Economist2008)
- Managing Envy and Jealousy in the Workplace (Dogan and Vecchino 2001)