Why Workplace Incentives Don’t Actually Work

Why Workplace Incentives Don’t Actually Work

Why Workplace Incentives Don’t Actually Work banner

With the recent announcement of the 2016 Nobel Prize in Economics being awarded to Oliver Hart and Bengt Holmstrom for their work on employee contracts and incentives, it got me thinking about what actually motivates employees in the workplace. Not to take away from their award, but, from my professional experience, I think contracts and incentives are an incorrect starting point if you want to promote employee satisfaction and productivity.

You might be thinking: Almost everywhere you turn there seems to be another rewards-based incentive program to motivate people. Surely, there must be something behind this idea.

The truth is that this approach can work short term, but only for people who don’t like their work. With time, these people will only demand larger rewards to gain the same satisfaction. And for people who actually enjoy their work, their performance and motivation will most likely decrease short and long term since they are the ones who don’t require external factors to do what they enjoy.

I have found that the best way to ensure people are at their best at work is to align their abilities (what they are able to do if motivated) and their interests. This intersection is where people will thrive.

The Problems with Motivational Programs

Each person is unique and has different needs. Most motivational programs assume that all people are motivated by the same factors. This is simply not true. Why in many motivational programs there are different winners and losers? Whether it is the sales trip to Hawaii, the employee-of-the-month parking spot, or the employee-of-the-week free lunch, these programs only offer the opportunity for the unhappy workers. These programs are in use because they are easy to implement, measure, and produce. They don’t take deep thought or long directions to understand. Do this and you will be rewarded, or do that and you will be punished. People are much more complex.

How Not to Motivate People

In order to learn more about motivation, first learn how not to motivate people. Here are a few ideas:

  • Give people work not worth doing or which does not add value.
  • Micromanage people by giving them less opportunity for autonomy and decision-making freedom.
  • Make people compete against others or standards. Use this as the sole guide for rewards and punishments. Showcase the winners and losers to everyone else. This will for sure help to lower morale and motivation.
  • Focus on productivity and efficiency and not on personal development.
  • Ignore peoples’ abilities and interests and, instead, like cattle, herd them only to work which needs to be done in specific ways.

A Better Approach

Here are three ideas:

  • It starts with the hiring process. Hire people who want to do the work you have available.
  • Make people-development a higher priority than profit. That’s right, you read that correctly: When people feel like their lives mean something to those they work for, productivity will soar to all-time highs and, of course, will be followed by profit.
  • Give people full autonomy in their work. Let people make all decisions, work in ways which best suit them, and encourage collaboration but not competition at work.

How to Enable Motivating

Enabling motivation means teaching. Managers teach people how to motivate themselves, and, in turn, people find ways for self-reward, praise, and internal motivation. Stop the silly Friday dress-down days, employee-of-the-month awards, and special parties for high performance. This rarely works for children, so why assume this motivational approach will work for adults? Treat people at work as owners, and, as a result, people will act and make decisions like owners.

So, What Really Motivates People at Work?

This is a complex question and one which is unique and different for each person. The best way to understand another person’s motivation is to ask them: ‘What motivates you, and why?” A leader should be ready to listen and enable more of this at work for motivation to increase. Most important is that there is a difference between motivating and enabling motivation (see above). Understanding this difference will enable people and organizations to thrive and work better together, which can only help the bottom line.

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