We've all heard the old adage, "money makes the world go 'round," but that doesn't mean it makes the world spin faster. Yes, currency is a driving force in the global economy, that much is clear. After all, it affects everything from individual stability to international competition.
The problem is that many employers – in a sincere effort to reward employees – apply this grand concept about money being the be-all end-all on a micro scale. In short, they feel that cash rewards will motivate their staff to work harder, become more engaged and perform their best. While this certainly makes logical sense, every study and survey done on this subject throughout the years seems to indicate otherwise.
Despite the fact that there's a certain degree of excitement in being able to afford a new T.V. or house, employees won't always draw the connection between this increased financial power and the employer's appreciation. We all love nice things, but sometimes a simple "thank you" goes a lot further than a one hundred dollar bill.
Mind Over Money
Reward and recognition isn't just a business process, it's a chemical one. Our brains are wired to encourage good behavior and avoid punishable or destructive actions. It's this metal process that dictates how effective a reward is. Statistically, money just doesn't create a strong subconscious bridge between the employee's beneficial actions, nor does it send the proper message of thanks that management hopes to accomplish.
The connection (or lack thereof) is perfectly explained by Charles Jacobs of Forbes. He advises that “When people are totally engaged in their work, the neurotransmitter dopamine is released, which sharpens focus and increases performance while creating a profound sense of wellbeing. We are motivated by the work itself, not the reward.” In other words, our brains are motivated by achievement, not the monetary reward that we may receive. If management is kind enough to compensate us in some fashion, we don't see it as an added bonus, but rather getting our due for the extra effort; it’s essentially entitlement, not engagement. Jacobs also warns that this type of incentive only attracts “less-than-stellar performers,” meaning that this temporary incentive is useless for those who are already engaged. Money won’t increase satisfaction or improve motivation.
Power of Choice
Rewards are most effective when the rewardee can clearly see what leads to the recognition. For instance, immediately pulling an employee into your office to thank them for their contributions to a crucial project directly associates their positive behavior with their employer's appreciation. But if management intends to motivate almost exclusively through prizes, then there's another factor to consider.
In the words of Doug and Polly White of Entrepreneur, “Once the employee receives the money, its power to motivate ends very quickly. Some studies say within a week."
This is the foundation of effective vs. ineffective recognition, and is precisely why slapping a bonus on someone's paycheck two weeks after the fact isn't going to jog their memory. They won't strongly remember what they did right, nor will the rewarding feeling stay with them for long. Consequently, this reduces the chances of repeat behavior. But when provided with the option to choose a reward that really appeals to them, staff are much more likely to engage in positive actions that link their accomplishments to their desired prize.
The Bottom Line
We've mentioned this in previous posts, but it needs to be repeated – the main reason people leave their jobs is because they don't feel appreciated. This can be perplexing to managers and HR professionals, considering that the vast majority of organizations (over 70%) do provide some form of employee recognition, including cash rewards. The issue isn't whether recognition programs need to be done, but rather that they need to be done right.