Join Todd Dewett for an in-depth discussion in this video Using monetary motivators, part of Motivating and Engaging Employees.
- We all expect a decent wage for the work we do. But beyond basic compensation, there are plenty of additional ways to use money as a part of your overall motivational efforts. Now we just spoke about how research shows that money isn't always the best motivator. However, there are times when it's appropriate to use money. Just remember to never allow extrinsic motivation to harm intrinsic motivation. While money and other incentives can play an important role, they shouldn't be the sole or dominant approach to motivation. When money becomes a singular focus for motivating your employees, they can forget about why the work matters and instead think only about the rewards.
When this happens, employees move towards safer behaviors instead of risk taking in the name of innovation. I also want you to remember that all rewards must be provided contingent on performance. Stated differently: we must connect the use of all rewards with the production of excellence. Not good performance, not meets expectations, but really exceeds expectations. Make them earn it. I will admit that some across the board pay increases or bonuses are useful to show everyone how much you appreciate their hard work.
However, most of your monetary efforts should be more thoughtfully applied based on individual performance. Okay, with these comments in mind, let's consider a few popular monetary incentives. Aside from base salary or hourly wages, there are many common monetary incentives you might consider. For example, profit sharing. This approach has long been a common practice for progressive firms. The idea is simple: if the company prospers through good profits, we will give back to employees to ensure they prosper too.
This tends to be a basic, across the board approach that is popular with employees. Next, consider scheduled bonuses. A scheduled bonus is given at predetermined points in time following an agreed upon formula. This approach allows profit sharing in a sense, with far more creative ability to tailor what you do. A given bonus might apply to only a particular group or division, and it might be calculated based on profits, revenues, or some other aspect of performance. Some companies also use project bonuses.
This is an effort to recognize that not many jobs are based on simple, repetitive tasks but on larger projects that may take many months or years to complete. For example, a clerk in accounts payable tends to do the same thing over and over. But a design engineer might work on a single new product for over a year. At the end of a long, important projects a small financial thank you is often a useful way to show gratitude. For long-term commitment, some public companies choose to offer stock options. The idea is that when employees own shares of the company they will have a strong interest in doing what's right for the company. In addition, many times you'll see vesting periods that are several years long, which is a smart way to help employees focus on the long term not just the next quarter.
Next, consider spot rewards. These are small financial rewards given on-the-fly, as-earned right there on the spot. This typically includes a small amount money or some type of gift card. These have impact because there's so little time between the performance and the reward. They provide immediate reinforcement. Finally, some organizations use gain sharing. Gain sharing is a type of program whereby the company agrees to give back to employees some portion of the dollars saved or earned through internal improvements.
When employees improve certain agreed upon measures of quality, cost, or productivity; a portion of the windfall becomes theirs. Here's one additional useful thought. Don't forget how much employees appreciate choice. You have many options for financial incentives so be sure to partner with employees to find out which options they prefer. Financial incentives have always been around and always will but to get the most out of your efforts remember to make people really earn their rewards, and always consider financial options as only one part or a broader motivational effort.
That way, they'll reinforce the importance of the work, instead of becoming the object of the work itself.
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- Assessing employee engagement
- Providing autonomy
- Building a transparent culture
- Modeling desired behavior
- Using monetary and nonmonetary motivators
- Fostering accountability
- Developing career paths for employees<br><br>
- The PMI Registered Education Provider logo is a registered mark of the Project Management Institute, Inc.