It’s only November, but this is the time of year that employers start thinking about holiday bonuses. I can see the dollar signs in your eyes already! It’s sure nice to get that extra money, but does it really make any difference to how you do your job, or how much you enjoy your work?
The answer to this question might surprise you.
For a long time, the accepted theory was that if you offered employees a bonus based on performance, they would work harder to earn it. This theory was most notably put into practice in the financial industry, where, in the 1990s, executives received only 10% of their pay in bonuses, but by 2003 were receiving up to 70% in bonuses (see this Wharton School article for more on how this worked). And then came the financial crisis in 2008 - remember that?
Turns out that people ARE motivated by money. They’re motivated enough to justify unethical behaviour and cheating, to resent and become jealous of co-workers and to jump ship to any other company which will offer them more money. This behaviour was happening all over the place on a smaller scale (and still is).
What does this mean for us regular people with ordinary jobs?
Study after study has found that, as long as people are paid a reasonable wage, the most important motivating factor is the work itself. When all is said and done, findings show that there are actually four things that motivate us all in the long-term, and none of them are money. They are: autonomy, mastery, purpose, and personal connection. One of the best explanations of these motivating factors that I've found is an animated presentation by management expert Daniel Pink, here.
Autonomy: We've all had one. That super annoying boss who insists on micromanaging every aspect of your work. There are many ways of getting a job done, and the research shows that if you give a person the responsibility for a task where they get to choose goals, schedules, and work methods themselves, they will care about the results and do a better job. I know that's always worked for me-it's part of the reason I'm now self-employed!
Mastery: People like to be good at doing stuff, an expert. In the Daniel Pink video I mentioned above, he talks about software developers, for example, who have created open-source products such as Linux (powering about 25% of corporate servers), Apache (the world's most used web server) and Wikipedia in their spare time, only to give it away! These people are creating great stuff for free because they like the challenge, they like being good at something. It's satisfying. This can- and should-happen in the paid world as well. Can you imagine it?
Purpose: Making a contribution. People like to know that their work is making life better for someone else. This message really gets through when you meet an individual customer and hear their story. In this Forbes article, one university's fundraising team raised five times more money after they met one scholarship student who benefited from their work. Inspiring!
Connection: This is about feeling a sense of belonging in your workplace, a sense of community, and of being valued by co-workers, supervisors, and customers. Relationships matter, and being part of a team at work can be very motivating-no one wants to let their friends down. In fact, they'll do their best to help them out.
This isn’t to say that there aren’t still situations where money is effective as a motivator. For example, some jobs are so distasteful that no one would do them unless you gave them a lot of money! There are also all kinds of interesting ideas on how to make financial bonuses more meaningful to those that receive them, and to customize rewards to your corporate culture (read more here). But that's a discussion for an entire article in itself.
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