What's New in Incentive and Motivation Theory

Boosting staff motivation is not a simple matter of just using money as an incentive for performance, many companies are starting to realise. Although some managers may assume that financial rewards are the best way to recognise their staff's achievements, experts believe that the field of employee motivation is much more complex than this.

A study published in May by professional services provider PricewaterhouseCoopers (PwC) suggested that workplace morale cannot be supported by money alone. The research found that 47 per cent of UK employees think that it is important to have a good work/life balance, while only 19 percent would prefer to receive a performance-related bonus.

Cary Cooper, distinguished professor of organisational psychology and health at Lancaster University, is one of the experts who believe cash is a poor motivator. He pointed out that previous research has established that monetary rewards are a poor method of boosting motivation and appear low down on the scale of factors which influence employee engagement.

"Money only becomes an indication that you value [staff]. It's just a metric," he said."It isn't the money per se that they are motivated by; it's the recognition that their organisation values them."

Professor Cooper, who recently published Employee Morale: Driving Performance in Challenging Times with management expert David Bowles, explained that the most important way of motivating workers is to demonstrate that their efforts are appreciated. He claimed that employee recognition or managing people by praise and reward" are starting to be seen as the most effective ways of ensuring high levels of performance.

Research carried out by the Chartered Institute of Personnel and Development (CIPD) earlier this year appears to show firms are coming round to this viewpoint. While the group's Annual Reward Management Survey found that 71 per cent of companies operated some form of cash-based bonus or incentive plan in 2009, others are starting to realise that non-financial alternatives can be effective.

The study discovered that the trend for employee incentives is shifting towards the non-financial, with 30 per cent of companies currently offering their staff non-cash rewards such as travel packages -showing a significant increase on the 17 per cent which did so in 2008.

Additionally, the research revealed that businesses are becoming more attentive to the consideration highlighted by Professor Cooper - employee recognition. During 2009, 41 per cent of enterprises ran a staff recognition scheme, such as an employee of the month award, growing from 31 per cent in the previous year.

Highlighting the advantages that using non-cash incentives can have for companies in times of economic difficulty, the CIPD report commented:"Part of the increase over the year in the use of these low-cost plans may be attributable to the state of the economy and many employers having a tight budget from which to reward and recognise individual and team contribution[s]."

Professor Cooper also claimed that an effective employee motivation strategy will not just concentrate on rewarding the achievements of top-performing workers, as the traditional financial bonus system does.

When asked if companies should use different incentives for workers of varying performance, the expert commented:"The high performer is less to worry about than the low performer." He explained that motivation and incentive schemes for these workers simply haveto encourage them to keep performing well.

Professor Cooper added a different approach is needed for workers who show poor levels of performance, explaining:"If you have an underperformer, you have to get under their skin and understand why they are underperforming."

The expert suggested that some workers fail to perform because they are being demotivated by poor management practices, which is something the company can take active steps to remedy.

Furthermore, he claimed that changing corporate culture can leave some workers unengaged or uninterested in their current job - a view supported by previous PwC research that found seven per cent of UK employees do not understand how their role fits within their organisation's plans. The professor said that to motivate these individuals, firms are starting to realise the importance of finding tasks which their staff can excel at.

However, Professor Cooper urged companies to bear a single tip in mind when establishing their motivation and incentive strategies,concluding:"The important thing is to make the person feel valued: give them support, listen to them, engage them."

If you would like to know how Love2reward can help your motivation scheme, then talk to us today. Complete the enquiry form on the right of the screen or call 0845 313 0357.


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