Editorial
The use of monetary incentives to influence employee motivation has become as common a management practice as GAAP and Lean. However, these approaches have limited effectiveness — and can even be detrimental. At a time when all workplaces need to become more human-centric, it’s time we move beyond bribes, and instead develop truly meaningful approaches to recognition that help cultivate a human-centric culture.
Before you read on, think about a time when you received particularly meaningful recognition at work (or elsewhere). What was it? How did you feel? What lasting effects did it have, if any? And how did that recognition compare to the promise of a monetary bonus — or a bonus withheld — based on some important outcome or achievement?
The Downsides of Tying Money to Metrics
Money is important and necessary. Most of us like to eat food and live indoors, so money comes in handy.
But there's a difference between salaries and financial incentives: The former are part of the exchange of value inherent to an employment contract, while the latter narrowly focus on specific behaviors or outcomes. The former compensate people, the latter manipulate them.
In other words, if wages are the electricity that powers an employee's car, then financial incentives are someone in the passenger seat, grabbing the steering wheel.
A wide body of research suggests that tying monetary incentives to work performance can actually be harmful and counterproductive, especially when trying to cultivate a human-centric culture. In 2018, Forrester published an important research brief titled “Why paying employees for delivering good CX is a bad idea,” which detailed the negative effects of monetary incentives. While Forrester’s research focused specifically on bribes related to customer experience, the findings apply more broadly.
While leaders’ intentions may be good for connecting metrics to variable pay, Forrester’s research identifies how this leads to four negative behaviors that work against the strategy they were meant to support. Instead of cultivating more human-centric behaviors, organizations that bribe employees to improve customer experience get the following:
- Begging: Employees beg customers to give them a positive rating. "Give me a 10 or I'll get fired" is the extreme version of this, and it turns out that doesn't create a positive experience for the customer. Because this begging happens at the end of the experience, it discourages candid feedback from the customer and creates an outsized negative impression and influence on the customer’s perceptions of the organization.
- Arguing: Employees insist that something is wrong with the metric: the sampling method is ineffective, the statistical significance is questionable, the calculation is in error or the system is unfair. Employees put more energy into arguing with the metric than into delivering the hoped for results, and the often-under-resourced metrics team wastes time fielding these disputes instead of equipping the organization with metrics that can guide improvements to more-meaningful outcomes.
- Resisting: Because the metric now has stakes involved, leaders resist making any changes to metrics or methodology. That means the approach can't evolve to keep up with changing customer expectations or other evolutions in the broader business context.
- Demanding: This behavior is probably the least talked-about and the most important unintended consequence. Delivering a good customer experience, for example, is essentially an altruistic act, based on an intrinsically human instinct to take care of other humans. Monetary incentives transform this into a transactional quid pro quo, in which employees believe they're expected to take care of customers only in exchange for a monetary incentive. To paraphrase leadership development expert John Whitmore: "If you use carrots and sticks, you'll get donkeys."
Why We Think We Need to Bribe People to Do Good Work
The impetus behind using bribes at work comes in large part from unexamined assumptions about our fellow humans. In the book "The Human Side of Enterprise," MIT professor Douglas McGregor suggested that managers are influenced by one of two theories about human motivation, which he called Theory X and Theory Y. Theory Y managers believe that people are intrinsically motivated to do their best work. Managers who subscribe to Theory X assume people won't do the right thing if left to their own devices, but rather need to be manipulated and controlled. These command-and-control managers give employees scripts, rigid policies, quality standards, extensive rules and, of course, bribes to influence their behaviors.
The Theory X management approach has at least two negative consequences. First, it reduces human autonomy and self-efficacy, which causes people to disengage because key attributes of fulfilling work are gone. Second, it reduces response flexibility. Since most human-centric behaviors at work are the result of highly-tuned situational awareness, adapting and responding to the specifics of each human and each interaction, this lack of flexibility makes work less human.
If you’ve grown up in corporate contexts like I have, you’ve probably heard the cliché that what gets rewarded gets repeated. It sounds true in part because it aligns with the Theory X mindset that is so prevalent, but also because it contains alliteration and a strong poetic meter (check the research from Matthew McGlone and Jessica Tofighbakhsh on the “rhyme-as-reason effect” for more on this). The mechanistic metaphor of rewards and results also has an appealing simplicity. But if you’ve ever been a human, you know that we’re not quite as simple as the “pull a lever, get a prize” mindset suggests.
The assertion that humans repeat the actions for which we’re rewarded isn’t completely false, of course. But it’s an incomplete perspective that casts people as coin-operated automatons who won't make their best contributions unless there’s something in it for them. It also creates some undesirable side effects.
First, bribes can be effective in the short-term, but because they short-circuit the higher motivations that make us human, they won't lead to the mindset and belief shifts needed for true human-centricity, and will have a negative effect over the long term.
Second, most research on monetary incentives shows they are effective for encouraging repetitive, routine behaviors. However, the research also shows negative effects for more complex, prosocial, human-centric behaviors like empathy, collaboration, creativity and proactivity.
The myth that only money motivates people is pervasive. It’s true that if you ask people what motivates them at work, the first thing they'll mention will likely be instrumental rewards like compensation. But research into human motivation has found it’s more-idealistic rewards, such as purpose, significance, connection, growth, progress and autonomy. Daniel Kahnemann's research showed that money can motivate us when we're not making enough, but once a person's basic needs are met, additional money doesn't increase our motivation.
Instead of Bribing, Try Noticing and Celebrating
So, what should we do instead of bribing people? To make work more human, we need to examine why we’ve accepted “rewards and recognition” as somehow inextricable or synonymous. Instead, we should consider how we might intentionally notice and celebrate the attitudes, mindsets and behaviors of human-centricity.
As leaders who want to cultivate a deep and lasting human-centric culture, not simply get people to behave as if they're human-centric for a short time, our job is to notice when people exhibit the attitudes, mindsets and behaviors that support human-centricity, and to celebrate when they do. In my book, "Stop Engaging Employees: Start Making Work More Human," this is the essence of Embrace, one of the essential disciplines of a human-centric leader.
Noticing requires us to tune in mindfully to the positive. Again, if you're like me, you were raised to believe that the most important skill of a leader is spotting what's wrong and fixing it. But now we're training ourselves to, as Ken Blanchard put it, catch people doing something right.
5 Attributes of Effective Employee Recognition
Once we notice, we celebrate — but if you're thinking this means cake and balloons and clowns and a DJ and an Olive Garden gift card, let me break down the five attributes of effective recognition or celebration for you. Most corporate recognition programs fail on at least one of these attributes.
Personalized
First, effective celebration is personalized. That means it is valued by the recipient and makes the recipient feel valued. For some folks, a bouquet of flowers sent to their home is valuable. For others, it's a handwritten thank-you note. Some folks like big public celebrations in front of the whole team. Others would prefer a one-on-one conversation. Of course, to achieve this level of personalization, you have to know the people you work with, and understand their needs, aspirations, fears and motivations as individuals.
Frequent
Next, effective celebration is frequent. Tiny weekly (or even daily) celebrations of human-centric attitudes, mindsets and behaviors will be much more effective than quarterly or annual ones. Celebrate often, and don't be afraid of thanking people too much.
Relevant
Effective celebration also needs to be relevant. That means that it serves to reinforce the attitudes, mindsets and behaviors the organization values and how each person contributes. A plaque for 20 years of service is great, but it communicates nothing about what the organization wants to cultivate (other than, perhaps, endurance). Noticing and celebrating communicates to the entire organization what is most valued, so make sure that you're noticing and celebrating attitudes, mindsets and behaviors that matter to your human-centric culture.
Specific
To be effective, our celebrations also need to be specific. We need to tell our fellow humans exactly what we noticed and why we're celebrating it. We all love to hear "Great job!" but the value of those two words to your human-centric culture is pretty minimal. Instead, try this little Mad Libs to make your celebration specific:
- “Great job!” Feel free to start there.
- “I noticed you…” Here, insert the human-centric attitude, mindset or behavior that the person exhibited.
- “That's important because…” This is your opportunity to connect what you noticed to your strategy and values. For example, “that's important because we strive to be the most customer-centric pest control service in our zip code.” This sentence should convey the relevance of what you noticed.
- And then wrap it up with a sincere, look-em-in-the-eyes "thank you."
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Timely
Finally, effective celebration is timely. That is, it occurs as soon as is practically possible after noticing the valued attitude, mindset or behavior. With every hour, day, week or month that passes between noticing and celebrating, the value erodes. Notice and celebrate as close to simultaneously as you can.
It’s Time to Move Beyond Bribes
When we take the time to notice and celebrate the attitudes, mindsets, behaviors and outcomes that we want and need in our workplaces, we reinforce what’s most important and the value of each individual contribution. We also help people feel valued, appreciated and respected. We stop treating people like coin-operated machines that only care about what’s in it for them, and start treating them as if they’re just as interested as we are in making meaningful contributions. Moving beyond bribes to meaningful celebration preserves dignity for everyone and helps make our workplaces more human.
Editor's Note: What else can you do to improve employee recognition?
- Work. Acknowledge. Reward. Repeat. — Recognizing employees who do good work is an important part of motivating a team, but all forms of recognition are not created equal.
- Boost Employee Morale Through a Holiday Gratitude Challenge — Ending the year with employee recognition and gratitude can reset morale after a stressful year and set the tone for the year ahead. Here's how.
- How to Use Slack and Comms Tools for Employee Recognition — While comms notifications can serve as a distraction, in the case of employee recognition, new research found these messages drove performance.
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