It's an age-old problem: How do you reward employees without breaking the bank? If the reward is too small, will it be counterproductive? Or is getting a cheap trinket better than nothing at all?
According to a recent article by Harvard Business Review1, your mother was right: in terms of gift-giving, it really is the thought that counts.
In the article, the author discusses a 2012 study on the relative motivational power of cash versus tangible gifts. The experiment is simple enough: a group of people respond to an ad for a short-term assignment at a stated hourly rate. The researchers then gave small rewards, each worth the same amount, to randomly chosen employees and measured their productivity against a baseline.
When the reward was given in cash, there was no change in productivity. However, when the reward was given as a token gift, employee productivity soared by 25 percent. Interestingly, most employees didn't even want the gift-in another experiment, when given the choice between the gift (a plastic water bottle) or the cash, 80 percent chose cash.
So if no one even wanted the water bottle, why did it have such a dramatic effect on productivity? The difference was the thought behind the gesture. Adding a small amount of money to a paycheck is impersonal and automatic, but choosing a gift for someone takes thought-even if that gift ends up being cash. When the employees were asked how they wanted to receive their rewards, it showed genuine interest on the part of the employer. What the employees chose wasn't nearly as important as the fact that they were given a choice in the first place.
So what does this mean for you? If your company has a limited budget for employee rewards, it's OK to give rewards with negligible financial value, as long as they're given from the heart. A sincere "thank you" is free, and carries more motivational power than an extra $25 on a paycheck-money that will go unnoticed, spent on groceries, or both.
For an employee reward to have lasting impact, it needs to have "trophy value;" that is, it should be something an employee can proudly display as a reminder of his or her excellent performance. Whether that's a certificate of achievement, a new watch, or tickets to a sports game is between you and your employees. It should also reward a specific behavior tied to the goals of your organization. Gifts given at random are good for morale, but do little to reinforce desired behavior. And finally, involve your employees in the reward decision. The plastic water bottle in the study probably wouldn't motivate a stockbroker, and a small cash bonus might be just what an employee needs that week. The important thing is to make the reward meaningful, and no one knows what means the most to your employees better than they do. Simply providing a choice between options-even just two, like the cash or the water bottle-both shows that you care and allows the employee to pick the more meaningful reward.
1Fisman, Ray, "Forget About That Cash Bonus." Harvard Business Review. March 4, 2013 ( http://blogs.hbr.org/cs/2013/03/forget_about_that_cash_bonus.html ).
Achievers Software and a Service™ reinforces and inspires the employee behaviors that drive measurable business success. With our award-winning technology, unmatched customer service, and industry-leading expertise, it's no wonder some of the world's most successful companies trust Achievers with their most important assets: their employees.
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