Buying performance through higher compensation

In today’s tough economy it can be difficult keeping employees motivated and productive. The company is running leaner and meaner. There aren’t a lot of extras – like helping hands – so employees are putting in longer hours. However, you still want to recognize star performers.

Remember the old Beatles tune, “Can’t Buy Me Love?” Well, you can’t buy your employees happiness or motivation, unless you sing their praises.

Recognition vs. Compensation

In the June 19, 2009 Entrepreneur article “5 Employee Motivation Myths Debunked,” the number one misconception that managers have about employees is that money is the primary motivator. Yes, employees want to be compensated at a level that they feel coincides with the amount of skills and effort their job demands. However, while a bump in pay or a bonus might provide temporary satisfaction, the law of diminishing returns tells us that money can only take you so far.

The November 2009 McKinsey Quarterly article, “Motivating people: Getting beyond money,” suggests that there are “numerous studies” to back up the conclusion that as long as an employee is being fairly compensated nonfinancial rewards are better motivators than money. In fact, as part of their research the writers concluded that while 60% of participants in a survey felt that performance-based cash bonuses were “effective” or “very effective” ways to engage and motivate employees, 67% said the same about praise and commendation from an immediate manager.

Making Recognition Work for You

Understanding that employee engagement has more to do with words of acknowledgement than heaps of money, here are some suggestions on how to make your words count:

• Make it visible. If you’re going to recognize a team member’s accomplishment, make sure that you offer something tangible when others are looking on. A blue ribbon, certificate of appreciation or words of praise at a staff meeting goes a lot further than an unseen handshake.
• Give it meaning. People have to truly feel appreciated for it to count. So make sure you are sincere and enthusiastic, and that the recognition is specific to the individual. If everyone gets a gift coupon for their hard work, the only person who will feel motivated is the one not included. In that case it will be a de-motivator.
• Do it personally. Recognizing someone face-to-face is a whole lot more effective than doing it via a department-wide email or through a second lieutenant. Plus it will hold more meaning for the recipient.

The good news is it won’t cost you an arm and a leg to keep your team working productively. It will only take a bit of your time and a few well-chosen words.

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