08 Apr 2013  Research & Ideas

How to Demotivate Your Best Employees

Many companies hand out awards such as "employee of the month," but do they work to motivate performance? Not really, says professor Ian Larkin. In fact, they may turn off your best employees altogether.

 

It would seem to make sense that when companies recognize their workers with awards, they are likely to see a boost in morale and perhaps even inspire them to work harder.

It turns out that sometimes rewarding employees for good behavior can actually backfire, leading to a drop in motivation and productivity.

More than 80 percent of companies dole out work-related awards like "employee of the month" or "top salesperson." Managers often view these awards as inexpensive ways to improve worker performance; many believe that when employees bask in the glow of corporate praise, they may even feel motivated to work harder over the long term.

But new research suggests that some awards may actually have the opposite effect, according to a recent paper called The Dirty Laundry of Employee Award Programs: Evidence from the Field, written by Harvard Business School Assistant Professor Ian Larkin, along with professor Lamar Pierce and doctoral student Timothy Gubler from the Olin School of Business at Washington University in St. Louis.

The researchers studied an attendance award program initiated by managers at one of the five commercial-industrial laundries owned by the same midwestern company. Perfect attendance was defined as not having any unexcused absences or tardy shift arrivals during the month.

The plant managers had all the right intentions when they implemented the award program. Absenteeism and tardiness costs US companies as much as $3 billion a year. And in the case of the laundry plant, one worker's tardiness or absence can affect another's productivity. If one team of workers falls behind on the job, for example, other workers down the line are left to sit idle.

Stellar employees who previously had excellent attendance and were highly productive ended up suffering a 6 to 8 percent productivity decrease

The plant's attendance award program began in March 2011 and continued for nine months. Employees with perfect attendance for a month, including no unexcused absences or tardy shift arrivals, were entered into a drawing to win a $75 gift card to a local restaurant or store; the winner's name was drawn at a meeting attended by all the employees. At the end of the sixth month, the plant manager held another drawing for a $100 gift card for all employees with perfect attendance records over the previous six months.

The program did produce one benefit the plant managers were looking for: it reduced the average level of tardiness and led to more punctual arrivals for the workers who participated.

Airing dirty laundry

Yet when Larkin and his colleagues took a closer look at employee time sheets and records showing the amount of laundry that actually got done both before and after the program was introduced, they found that the plant—unlike the other four that didn't have an award program—experienced some problems:

  • First, employees ended up "gaming" the program, showing up on time only when they were eligible for the award and, in some cases, calling in sick rather than reporting late. Most interestingly, workers were 50 percent more likely to have an unplanned "single absence" after the award was implemented, suggesting that employees who would otherwise have arrived to work tardy on a certain day might instead either call in sick to avoid disqualification or else simply stay home because they would be disqualified from the award regardless.

    Rewarding good employees takes many formsAlso, while punctuality improved during the first few months of the program, old patterns of tardiness started to emerge in later months. And once employees became disqualified and the carrot of the award was out of their reach, their punctual behavior slipped back downhill. Larkin says this runs counter to what some people believe—that such an award program might instill a long-term pattern of on-time performance in workers.

    The hope is that with the award "you get them to do what you want them to do in a habitual way," Larkin says. "But we can say it's the exact opposite. There was only a change in behavior while people were eligible for the award."

  • Second, and perhaps more significantly, stellar employees who previously had excellent attendance and were highly productive ended up suffering a 6 to 8 percent productivity decrease after the program was introduced. This suggests that these employees were actually turned off—and their motivation dropped—when the managers introduced awards for good behavior they were already exhibiting.

    These workers may have believed that the award program was unfair; after all, they had been showing up to work on time before the attendance program, so they wondered why an award was necessary and why some employees who used to show up late were winning the award.

    "The award demotivated these employees," says Larkin, who interviewed workers at the plant to gain additional insight. "People believed it was unfair to recognize people who only changed their behavior because of this award. They felt that 'I'm a hard worker, and now they're giving awards for something like attendance. What about me?' "

  • All in all, the award program actually led to a decrease in plant productivity by 1.4 percent, which added up to a cost of almost $1,500 a month for the plant.

    "Having your top performers demotivated for all eight hours on the job ended up creating a much bigger productivity hit than having the extra five minutes of work from someone who came habitually late," Larkin says.

Ultimately, the researchers concluded that rewarding one behavior sometimes can "crowd out" intrinsic motivation in another.

Rewards that work

Despite the fact that this particular award brought more harm than good, many other types of award incentives have proven beneficial for companies. But Larkin says corporate managers should manage them closely to make sure that employees aren't gaming the system and that the programs aren't fostering unintended negative effects.

"Many award programs have created value and are cost-effective for companies," he says. "Our paper shouldn't be taken as a blanket criticism of awards. You can't say awards are good or bad. It depends on how they're implemented."

This particular attendance award may have been especially flawed because rather than rewarding workers for exceptional performance, it rewarded them for fulfilling a basic job expectation.

"A lot of awards are focused on identifying people at the top of the class or people who went the extra mile," Larkin says. "This award did not recognize people who went above and beyond. It was an award for a behavior that employees should do."

Also, Larkin believes that awards are more effective when they recognize good behavior in the past, rather than behavior going forward. Plus awards for past performance aren't likely to see as much gaming, he says.

"It's motivational to hear that you've done a good job and are being recognized for doing the right thing," he says. "And it provides a good example for other people. People aren't being rewarded because they changed their behavior to match what the manager wanted or by gaming."

Larkin says that in the laundry study, the reward itself—gift cards—may have led to a higher likelihood of gaming. Sometimes it's better to keep money out of the deal.

"People respond very strongly to monetary incentives with this gaming mentality," he says. "When I talk to companies about award programs, I find myself telling them, 'Don't put in that $500 or the trip to the Bahamas.' It sounds like a nice thing to put in, but it also changes the psychological mindset people have."

Instead, Larkin says that companies may fare better just by giving people a nice plaque, sending an email to staff, or calling a meeting to recognize certain workers publicly in front of the whole crew.

"You can't put a price on that. The recognition of hearing you did a good job and that others are hearing about it is worth more than money."

About the author

Dina Gerdeman is a writer based in Mansfield, Massachusetts.

Comments

    • jackcaffey@gmail.com
    • owner, small business

    This article made good sense, right up until the end: "The recognition of hearing you did a good job and that others are hearing about it is worth more than money."

    Spoken by someone who's not worrying how to pay tuition or the heating bill.

    Recognition attached to a check would cover all the bases.

     
     
     
    • Beth Armknecht Miller
    • Leadership Development Advisor, Executive Velocity Inc

    I have known for a long time that employee of the month recognitions don't get you far and that it can actually cause resentment from other employees. I agree that the personal recognition by the leader can be very effective as long as the praise is both specific and impactful...ie what were the things that made the performance so good AND how did the performance impact the leader and the organization.

    In other words, a pat on the back and "good job" is meaningless.

    Also another effective reward is one that isn't expected, that comes out of the blue, based on an excellent performance. The surprise aspect can go a long way AND it doesn't set expectations for future rewards which can lead to entitlements.

     
     
     
    • Bob Mason
    • Principal, www.planleadexcel.com

    Any serious student of leadership could have predicted the results of this study before it was ever conducted. Herzberg proved this point years ago and his research has been confirmed multiple times.

    From a leadership point of view, people who exhibit regular tardiness or absenteeism do so for various reasons, but it isn't because they want a little extra money. In fact, recognition of a worker's skills or success on a particular project is a proven technique; if the recognition is genuine. "Employee of the Month" type programs often are not.

    Keep in mind also that sorting laundry is a mind-numbing task that doesn't lend itself to great motivation. A good leader needs to help workers understand their own motivation and not try to provide it for them. Sounds corny but I can site cases where it works.

    One thing that would work is challenging workers to improve the process, cut costs, or increase production then award a percentage of the improvement. The profit sharing is a recognition more than a reward and the laundry owner will find that workers will become more engaged in the business and the money will be secondary to realization of the workers own motivation.

     
     
     
    • Travis
    • Application Engineer, Unspecified

    There are also awards that are somewhat demeaning to employees. Think 'Gold Star' type awards that are more embarrassing to an adult than anything else.

    Also, some people really don't like public recognition, it makes them uncomfortable.

    Sometimes having the flexibility as a manager/supervisor/leader/etc. to treat each employee appropriately in order to obtain the appropriate behaviors is a very viable and important option that should not be over-regulated or restrained.

     
     
     
    • ron
    • cherry city heating

    I worked for 25 years at a construction company who had an employee awards program, If you showed up on time and did what you were paid to do, you got to keep your job. you might think this is just me trying to be funny but it's true. After they implemented an awards program for safety the workers treated it like a joke. The only saving grace was a high number of long time and loyal employees that got on board and pushed the program even though it was still laughed at. Too many were getting hurt doing stupid stuff and the lifers recognised that changes were needed or we would all suffer lower wages. Over all it worked out but could have gone bad without employee support.

     
     
     
    • Shep Hyken
    • Shepard Presentations

    This is an interesting article about those employees that "appear" to be engaged and productive, but are not. The incentives and the rewards that we think might be motivating our employees may not be doing their job. The good news is that there are some rewards that work, and I appreciate that the author shared some great examples of both.

     
     
     
    • Bruce Anderson
    • Chief Ethics Officer, Health Net, Inc.

    I would add, that receiving recognition from one's peers is a very strong form of reinforcement and fosters cooperation. So often, everyone is either directly or silently competiting with their peers. By setting up a system where people acknowledge each other publicly (team meeting, company intranet site) reduces inherent barriers between people and fosters focused commradery--two foundational building blocks of performance.

     
     
     
    • Anonymous

    Employee of the Month programs - - one winner and all the rest are losers. How motivational is that?

     
     
     
    • KenXo
    • Marketing Manager

    Holding a raffle for being on time is not an award, it is an example of poor management. I am typically demotivated when less conscientious peers are not held to the same basic level of organizational performance.

    And as a top performer who goes well above and beyond to exceed our corporate goals, cash is always a welcome reward whereas an email, while appreciated, doesn't afford me the ability to fully enjoy my sparse time away from the office.

    The topic of your next article should be "Are C levels motivated by a nice plaque, sending an email to staff, or calling a meeting to recognize them in front of the whole company or by increasing the size of their compensation package?"

     
     
     
    • m s s krishnan
    • major general (retd), Indian army, Retd, Indian army

    The researchers have brought out some valid observations. But the value of rewarding employees for the 'good job' cannot be relegated to a lower level. A pat on the back, a cup of tea with the boss, an announcement about ?n employee's achievement in an open forum are all various forms of recognising a performer. But mere lip service does not work in the long run. An orgnisation must have an awards/rewards system in place for people to aim for those awards and in the process enhance their self-esteem. Don't the Olympic Games teach us to aim, Faster, Higher and Stronger?

     
     
     
    • J Knight
    • Principal, TNC

    It never fails: offer a motivated employee a fair and properly administered objective compensation system and they will out perform the employee who is paid a flat wage no matter how effective he is. People work for money. Tie their performance to pay and they will consistently participate to the betterment of all.

     
     
     
    • George
    • Business Advisor, Petro Chemicals

    Over the course of my career I have been exposed to several incentive programs and mostly remember the ones that didn't work that way for me.

    One example was a fairly nice, and unexpected, cash award that I received for a project I had worked on. A lot of the positive impact was lost when the VP giving it to me apologized because it wasn't larger since company policy wouldn't allow larger awards for someone at my job level.

     
     
     
    • Kapil Sopory
    • Company Secretary, SMEC(India) Private Limited

    The moment a company decides to award for what otherwise everyone is expect to regularly do, be punctual for instance, it reflects management weakness of not being able to enforce discipline. Rather than award those who are punctual, it would be better if those who are not are taken to task. Hence, in my view, such awards are bound to be counterproductive with lot of scope for manipulation. The other grey area is that those for whom discipline is otherwise a way of life feel discouraged. Rewards may be given when someone walks the extra mile by doing something over and above his normal job,without compromising on the basic tasks, and by which the company benefits, financially or otherwise. Such awards can be granted objectively leaving little scope for the unscrupulous to play clever games to their advantage.

     
     
     
    • Tali Elisha
    • Learning & Development Coordinator, NFI Industries

    I have to agree with JackCaffey@gmail.com.

    Recognition only goes so far; in this economy, a financial incentive on top of public recognition goes a long way in showing how a company appreciates the hard work of an employee.

     
     
     
    • osiemo kengere
    • lecturer/administrator, mt kenya university

    Whereas in some organizations people may "pretend" that money is not a motivator, i believe that you could get a lot more from an employee who feels recognised through a variable pay award. When the firm does well, s/he gains financially. When things are not too good, plateau the pay and get results instead of these announcements, which would instead demotivate

     
     
     
    • Mukom Akong Tamon
    • Training Manager, African Network Information Center

    "Employees with perfect attendance for a month, including no unexcused absences or tardy shift arrivals, were entered into a drawing to win a $75 gift ...."

    And that right there is the problem. So I have already met the criteria you want (having perfect attendance) and yet I'll be thrown into some lottery to decide if I get rewarded?

    These programs are not bad, poorly designed ones are.

     
     
     
    • Dr Ali Shah
    • Sr. Officer Clinical Integration, SEHA

    This is wonderful article and I agree what Larkin has found in his survey. I would also add that if the winer of one cycle fails to maintain or fails to get the award in the next cycle, he or she is also at risk to loose his motivation or continue. I agree there is no alternat for an intrinsic motivation and many companies loose theire loyal workers in awards cycles particularly money driven and not properly managed

     
     
     
    • Aim
    • Drilling Engineer, N/A

    Employee of the month is a good example of how somebody can be both a winner and a loser at the same time.

     
     
     
    • Ellen Hakala

    In my opinion, solicitating people's ideas to improve service, asking them for ideas to improve revenue, giving and treating them with respect and consideration go alot further in promoting loyalty productivity... than giving monthly awards, shoutouts, and detailed rules to follow by the minute. Get to know your employees and what makes them happy and loyal. You will keep your employees longer, they will be happier and work harder.

     
     
     
    • Carol Morgan
    • Career Counselor, Career TPMS

    This is the thing that business-mindset will never understand about people. They cannot be manipulated with Skinnerian behavior modification. Human beings are not lab animals. They will not push on a pellet bar.

    Employees are far smarter than employers give them credit. They know when a reward is disingenuous; a carrot and stick approach for production.

     
     
     
    • Hugh Quick
    • Home, None

    One of the first jobs that I had was in the USA, because I was living there at the time. I still remember that one of the factors that motivated me was the discovery that my colleagues trusted that I knew what I was doing, such a contrast to my UK experience. Fortunately I did know what I was doing.

     
     
     
    • S. Max Brown
    • Principal, Recognition Management Institute

    The key question is this: Does the recognition communicate respect? If not, stop doing it - period. If so, continue to celebrate in a way that honors people. Too many organizational systems create unintentional consequences (i.e. performance reviews, annual raises for 1 or 2 people on the team, competition vs collaboration - compensation systems that incentivize people to hoard information and take credit instead of building others up, etc). Leaders should ask this question of themselves: Am I actively building others up or is it all about me?

     
     
     
    • Geetanjali Seewoosurrun
    • Senior Customer Services Officer, Utility Company

    Indeed, it's a very good article! Many employees reach office right on time and spend the day talking over the phone with family and friends, or spend more than one hour chatting in a colleague's office, making calls for their own private businesses while wasting productive time by one way or the other... You might have employees who are usually arriving office late but working a heavy load of activities and leaving office late to complete the minimum hours of daily work as required by law. It is not just a matter of daily working hours but a matter of how passionate one can be about one's work. Awards/reward system should be designed to cater for the real meaning of motivation.

     
     
     
    • Mark
    • Engineering, Honeywell

    It appears that most comments come from either management students or instructors that are Not actively engaged in everyday business ethics. This article seems directed towards that businesses that operate with a majority of hourly waged employees. Some commented that discipline is key, some say its giving out gift cards for showing up everyday. To increase productivity and loyalty a very simple part is for upper management to actually be engaged with the workers. Walking the floors, chatting with employees and actually listening to their concers then doing something to make improvements would actually go further than sitting on a high and private perch and rule with an iron fist, handing out an occasional gift card that may actually cause resentment from 99% of other employees

    At a previous employer the president of the company implemented a "presidents club". It was an exclusive reward aimed strictly towards the salesmen. Each year should the salesman meet or exceed their opionated sales goal they would be rewarded into the "presidents club". Then each year the individuals and one guest would be invited on a two week all expenses paid vacation with the company president. Typically it would be a private yach cruise in the Caribbean or a trip to Mexico or the Bahamas or some other top rate location. No cellphones, no pagers, no laptops the entire time. Each year the president had to explain to the other employees that this exclusive club of only salesman was necessary to retain salesman. This type of reward thinking really did backfire as every non-sales employee regarded it as a reward simply for doing their job; make sales. Others further down the food chain would actually go out of the way to sabotage a successful sale by dela ying product shipments, cause product defects to increase out of box failures all to prevent a salesman from receiving this gift in the box.

    Lastly, how does management get salaried employees improve performance? Salaried employees make the same income reguard less if they work 20 hours or 80 hours in a week. There is no logical incentive. I have in the past enjoyed a perk of a Friday or Monday off on an occasion for working extra hours during a project. Salaried employees don't normally get overtime pay, so extra time off is just as good. Getting away from a project actually allow myself to come back with a fresher mind, ready to jump back in faster.

     
     
     
    • Anonymous

    Good Behavior should be a bare minimum expectation from employees. Rewards & Recognition should be linked to performance only. Showing up on time, not taking excessive leaves, etc. are requirements from any professional. Having said that, good behavior should be recognized, but not necessarily rewarded with a tangible benefit.

     
     
     
    • Anonmous

    It is more concerned with Financial and Non-Financial incentives and its Psychological effects.As the reward was a combination of both recognition and though small but Financial incentives it effect was a combined result.

     
     
     
    • Ram Kalani
    • Asst.Professor, UDMS, Dr. B.A.M. University, Aurangabad. (M.S.) India

    Rewarding a person for what he is rather than what he should be JUST MAKES SENSE.

     
     
     
    • Jim

    It's interesting to note that so many studies focus on how cash or equivalent methods don't properly motivate line employees, but that not so many studies focus similarly on managers or executives. Rather than end the conversation with execs and managers, why not start it there?

     
     
     
    • Mwangi Kimani
    • PM, Volkan Kenya

    Saying that award programs have a negative effect is too strong an argument... maybe they don't work as well as intended but i am sure they do work.

    Larkin draws very fundamental conclusions from a very complex subject "behavioral economics". Human behavior is complex enough to negate most fundamental theories. Yes, awards may not be perfectly designed to for the best achievers, but then what is

     
     
     
    • Roy Saunderson
    • Chief Learning Officer, Recognition Management Institute

    Strangely enough many organizations still reward, or at least recognize individuals with perfect attendance. Some companies give cash or gift cards and others just post names of employees who have perfect attendance on their company intranet site or written up in newsletters or magazines.

    A reward is "something given or done (sometimes monetary), in return for meeting pre-determined goals, service or achievement". The problem with perfect attendance reward programs is that companies are rewarding employees for something they have no control over and cannot achieve on their own merits. Either that or you are motivating people to come into work when they are sick just so they can claim that reward at the end of the designated time period.

    Straight Shooting Tips for Dealing with Absenteeism

    1. Re-evaluate any perfect attendance reward programs you have. Ask yourself if you are rewarding the presence of unhealthy employees or just giving a bonus to those who are naturally healthy? What are you really rewarding?

    2. Ensure all managers are well versed in absenteeism management. Regularly review company policies and steps necessary when absences occur. Managers setting clear expectations and consistently holding employees accountable for absences, while being sensitive to genuine needs, make the greatest impact on reducing absenteeism.

    3. Recognize and manage the different types of absentees. Saul Gellerman in his book "Motivation in the Real World" identifies 4 Types of Absentees and how to treat them. Provide social praise and attention when the Habitual Absentee is actually at work; move the Conformist Absentee to a department or unit which has lower absentee levels; and help the Escapist Absentee to finally find their life purpose and a job fit either within the company or elsewhere.

    4. Use recognition versus rewards for perfect attendance. If you must make public acknowledgement of perfect attendance, use regular recognition rather than rewards. Best make it at the unit level where the employee's immediate manager or supervisor can mention achievement in a staff meeting and perhaps present a framed certificate.

    5. Manage human motivation and work-life balance. In reality, managing absenteeism is about knowing your employees very well and what their motivations are. It is developing trust so they can inform you of their life and family issues. Then you just have to manage work around their life.

    We have to be careful to use recognition, awards and rewards carefully and strategically.

    Used right and you can achieve amazing results. Used inapprorpiately and you'll get the unintended "dirty laundry".

     
     
     
    • Alex
    • IT Management

    This article makes a lot of sense. Recognizing individuals for things that are "Expected" to do is not healthy. Normally there are more than one person in a team or company that does it right, ergo selecting only one person or picking up a name from a bowl will definitely send the wrong message to the rest. Not arriving on time, taking longer breaks, having excessive Emergency leaves, and/or giving excuses for everything, are bad behaviors that should be identified since the moment of recruiting. Arriving on time, doing your work right, putting energy in what you do, translate into being responsible, being accountable, having integrity, etc., which are values that either a person has or doesn't. Values should be assessed and recognized in performance evaluations; employees not performing at the expected level should be placed into performance improvement plan. Awards should be given to individuals walking the Extra mile, clearly doing more than what their role and responsibility describe.

     
     
     
    • Nadeem ud din Ahmed
    • Regional Head, Standard Chartered bank

    Nice article, such incentives also become critical when we structure a reward to make incremental revenue in last quarter. The incentive is announced for next 3 months which does not take into account the performance of last 9 month. It clearly de-motivates all consistent top performers who perceive it as an additional and unfair.

     
     
     
    • Stephanie Hurt
    • associate professor, Meredith college Raleigh NC

    The article mentions all sorts of ideas which may work at times when financial rewards have been used as a primary incentive. In these hard times, increases in salary for employees who are performing well are very few and far between. The article forgets to mention the value of a simple financial reward which an increase in salary is and should be.

    We recently had a candidate for a high ranking position who was ready to distribute 'browny points' for those performing well, she never mentioned how she would actually reward those who performed really well over time financially.

    Let's keep in mind the basics: people also work for money!

     
     
     
    • Tom Pitt
    • Retired

    Years ago, as a salaried insurance company (SAFECO)employee, I noted on their prominently displayed "reward system" (gold stars for safe driving on an office board!) I had a black star by my name. I had been rear ended while driving a company car in NYC by someone whose brakes failed. To this explanation, my manager responded that I had some culpability by simply being there! Such infantile management thinking confirmed my need to head to graduate school, perhaps someday being in a position to help reform such systemic thinking. The "reward system" described here has a similar lack of depth of thought.

     
     
     
    • SRILA RAMANUJAM

    Nice point to be taken note of. But sometimes the magnitude of the problem might provide the scope for the 'carrot' approach to just work fine and award-strategy might just still do the job in setting right the problem. For e.g in a factory line where tardiness or unexplained absenteeism is to the proportion of more than may be 60% or higher Or this might even work out as a solution where a composite set of factors compound to create the issue and almost always then the law of the general rule might apply and an award-rich system might solve the problem at hand. So definitely agree to the generalized viewpoint that this rule should be evaluated in the particular case of the nature of the issue and the factors that go to largely cause the issue I guess!

     
     
     
    • Mike Spellecy
    • Managing Consultant, Maritz Motivation Solutions

    Issues such as attendance, while often considered employment table stakes, can become targets of performance improvement interventions, when poor performance creates negative financial impact. However, as with programs that address increased sales, improved profitability, new account development or other activities more often considered targets of incentive programs, the true driver of success in any incentive is its design.

    In the instance reported by Dr. Lamar the cause of negative performance impact was a poorly designed program. Sweepstakes have value as occasional group engagement activities but any expectation of positive change rests more with temporary employee morale improvement than with achieving an outcome or changing behavior longer term. Dr. Lamar's example demonstrates the downside of assuming sweepstakes will change behavior. As a singular event, once complete a sweepstakes provides absolutely (as opposed to relatively) no incentive for all but one participant. Who then becomes disengaged, understanding that her opportunity for future rewards has been further reduced. And sweepstakes provide an excellent opportunity to arouse the Drive to Defend, one of the 4-Drives of Human Motivation espoused by Dr. Nitin Noria and the late Dr. Paul Lawrence of Harvard. For existing top performers, providing a random chance to earn based on a behavior they naturally exhibit diminishes enga gement. If I have perfect attendance on a consistent basis and a program offers me an award opportunity equal to that of a poor performer I am disengaged and may well fall from my current performance level. And for the poor performer who temporarily improves for the chance at an award, motivation declines as chance dominates my award opportunity.

    As stated, design is key to effective incentive programming. Taking a participant-centric, non-manipulative view of the opportunity is a critical first step. Then, applying sound knowledge of human motivation and incentive best practices will insure a positive outcome. Such as this one: http://www.incentivemag.com/Resources/Motivation/Motivation-Masters--Kimberly-Clark-Professional-Is-in-the-Zone/

     
     
     
    • Ethan Farnsworth
    • GM, Advertising Sales

    I ran into similar situations with rewards being treated and negatives while working as an entry level sales executive years ago. The monthly reward was often determined moments before a weekly meeting and became a joke more than a reward. I've found some good input on leadership stuff like this at www.thestaakreport.com, www.entrepreneur.com, and of course right here at HBR. I responded to this because I laughed way too hard at a lost reward years ago. I would think any MBA student or graduate would have seen these results.

     
     
     
    • Anonymous
    • FARDELI

    The motivation to improve work performance should be internal character. The worker must project the motivation his personal gratification. Therefore, the award should be very personal, point up only when we meet each of the employees.

     
     
     
    • Prince Oswy
    • University Lecturer, University of Technology, Jamacia

    A good research on employee motivation. It adds to the body of work on motivation and the complexities of human behavior. It would have been good to see qualitative work done on what then do these employees want to motivate them and to increase productivity.

     
     
     
    • DANIEL MAKORI
    • MASTER OF SCIENCE (entrepreneurship) Student, JOMO KENYATTA UNIVERSITY OF AGRICULTURE AND TECHNOLOGY, KENYA.

    The rewarding system can be based on variety of set criteria that integrates all aspects of performance and productivity. The management will do a worthy job by exposing the employees to all job expectations and the culmination of the outstanding performance that merits to be rewarded. However the rewarding program may face teething challenges that will need to be addressed and the criteria refined to realize the anticipated results of the original proponents.

     
     
     
    • Mudala Mwiche
    • Chief Valuation Officer, NDOLA CITY COUNCIL

    What an article. I say this against the backdrop of our cerfemonial annual labour day awards, which is tailored to fulfill the very kill joys so eloquently espoused in this article. To say you reward steller performers is even an over statement in our case as there would be some some of criteria against which punctual workers are selected and categorised. Ours is a walk in a jungle maze! There is no clear cut criteria against which these awards are given and an effort to understand how these are given from HR produced a rather nonchallant foolhardy explanation; "these awards are meant for casual and temporary workers, to help them aspire..." duh!! So, in essesne what this mean is, those who arrive with say a Masters degree should forget about the award because they are outside the 'under-priviledged' lot who are being inspired to reach the higher level! What then happens to top managers? They do not need motivation? I am told, by the mere fact that they occupy those positions is motivation enough...lol. Just thinking and smh.

     
     
     
    • Vijaya Ramam
    • Mangement Consultant, L.V.Prasad Eye Institute ,Hyderabad,India

    We have introduced theEmployee of the Month award right from the inception of the institute about 25 years ago& as rightly pointed out by Dina Gerdeman,the effect gets diluted over a period of time .Instead ,it is better to give an award for an outstanding performer as & when he/she does an excellent job beyond the call of duty

     
     
     
    • Antony Kumar F
    • Service Delivery Manager, HP

    Good to see a different perview of R&R! Interesting!! :)

     
     
     
    • TJGodel

    It's no surprise implementing an employee of the month program based on attendance would backfire. Professor Larkin should read his colleague Yochai Benkler of Berkman Center for Internet and Society book titled, "The Penguin and the Leviathan: How Cooperation Triumphs over Self-Interest" to predict the outcome of such a reward program.

     
     
     
    • Vivian kassapakis

    As employers we often fall into the 'reward trap' looking at it from our own perspective and making broad assumptions about what we think motivates our employees. One of the most effective ways to reward staff is to actually ask them what they want and how they wish to be rewarded. What motivates them and what gets them out of bed everyday to come to work to be their best and above their best?

    Some like the public accolade whilst others shy away from this. Some are motivated by monetary reward or flexibility in their working arrangements whilst others are excited at performance assessment time and some employees simply want to hear the words 'well done'. There is no one formula or fix for all.

    It also depends on the size of the team and the ability of the employer to understand their people intimately . It is however a leaders responsibility regardless of the size of the organisation and under any structure to gain a broader and deeper understanding of their employees whether direct or through local team leaders if they wish to see a more engaged workforce.

    Understanding what intrinsically motivates their people allows any organisation the opportunity to then set reward programmes which can serve a variety of purposes - from recognition of outperforming behaviours to driving a specific outcome such as increased sales or productivity.

    If companies need to reward people to simply turn up to work on time or do their job then there is something terribly wrong with the underlying fundamentals of the organisation which has failed to create the proper environment that inspires employees to be at their best everyday.

    Understanding the outcome you want to achieve and the intentions that sit behind the thought process will often be more effective ways to engage a reward programme that actually works. It is also critical to understand the difference between rewards that encourage short term outcomes and those that strive to achieve long term embedded behaviours in people developing skills and attitude that are easily transferable to any role in any organisation.

     
     
     
    • Cheryl Portwood
    • Clinical Asst Professor, Drexel University Grad Nursing

    Recognizing that health care is an industry-- a big one-- in both not-for-profit and investor-owned sectors, how does this question play out in this setting? Healthcare has been, as long as I've been associated with it, in a cost- and resources-constrained environment. Yet employees are expected to consistently produce outcomes that are increasingly demanding of professionalism, high reliability, and accuracy. They are expected to welcome organizational change that affects their work processes to improve efficiency and effectiveness, defined as reducing cost. Nurses in particular are under heavy pressure in healthcare now due to the changing payment paradigm from case-based DRG reimbursement to "pay for performance." The idea of gain-sharing is coming home to healthcare now, and not at C-Suite level; at the level of those that are doing the necessary work yo achieve these payments.

    Historically, 'merit' increases have been minimal due to budget constraints. So, most healthcare delivery settings see employee recognition as part of their reward culture. But employee recognition has to be seen more broadly, as just one element of a healthy work environment, and it has to be meaningful to have the desired organizational outcome. That is, seen by the employees as meaningful.

    Beyond the cup of tea and pat of the back, what else is possible? There is growing discussion about developing a "culture of gratitude," which includes recognition but goes beyond that. Professionals in health care are really 'in service' to others and pay is an important, but not entire, reason they do the work they do and work where they do.

     
     
     
    • Shivalika Sharma
    • student, ubs

    Giving rewards for past behavior of employee's without making a announcement for it earlier, enforces the right values and behavior also acts as booster for non performers!!

     
     
     
    • NRM Rao
    • CEO, Tailored Management Solutions

    "Employees with perfect attendance for a month, including no unexcused absences or tardy shift arrivals, were entered into a drawing to win a $75 gift card to a local restaurant or store; the winner's name was drawn at a meeting attended by all the employees. At the end of the sixth month, the plant manager held another drawing for a $100 gift card for all employees with perfect attendance records over the previous six months."

    In other words: 1. " .... you give me a guaranteed 100%, and I'll give you a probability in return ...." 2. " .... everyone contribute to me, and never mind that I shall reward only one .... " 3. " .... all your collective problems that keep you from being punctual are priced by me at $74/m .... " 4. " .... all right, I'm willing to buy you guys off, @ one a month .... "

    They may not have an HBS pedigree, being only laundry workers, but I'd be surprised if they did not detect the implied affront.

    Managers who research, design, approve, implement, and study such schemes may be more educated than their victims, but whether they are smarter is yet to be established.

    If anyone is offended by my words I am glad. It is very much intended on my part, and is my contribution to better bonding between the different layers of an organization. Good man-management artifacts originate in the head, true, but their success depends on emotional acceptance at the other end of the trail.

    If you like jumping from high altitudes without a parachute, just try being cute or careless with people you are nominally responsible for.

     
     
     
    • Don Baragiano
    • Founder/Band Leader, Hejira Nation

    Some people want/need recognition .. some people prefer money .. some people want time off.
    Selecting what works best for each individual employee is the key.

     
     
     
    • Bijan Karimi
    • Asst Deputy Director, San Francisco Dept of Emergency Management

    I work for a local government and I don't have discretionary funds to use for employee incentives so I have to get creative with ways to reward my team as any extra expenses come out of my own pocket. To show my appreciation of a job well done I take a team member out for lunch, give them a handwritten note or even just a coffee. Best thing is, I can do this as often as needed and am not tied to a '...of the month' moniker.

     
     
     
    • Anon
    • Trainer, Govt

    Rather than 1 award, there should be multiple awards that hit various levels accross the board. For example, an A level performer doesn't benefit from a Most improved performance award, but a lower grade employee does. Just as a lower grade employee doesn't want the carrot of a Most sustained performance award. Sometimes a "great" co-worker isn't a leader, but they are reliable. We talk about leaders all the time, but a very good follower is how everything really gets done. There has to be something for A B & C workers. However, let us not forget that motivational corrective action is just as important for & CAN help D-F grade employees. I have been all these grades at different times because I have a life OUTSIDE my job that does affect my work performance. A good manager and a good rewards and corrective action plan got me through them all.

     
     
     
    • Mira
    • Management Consultant

    From a couple hundred employee interviews I have discerned (a) Timely (as in not 12 months later) raises and promotions as the best motivators (b) Email thank you and credit for a good idea copied to peers is another. Surprisingly most organizations (I've worked for 6 and consulted for 22) do neither or make feeble attempts at a. For example giving below market raises because its possible to do so not caring whether its right or not. Moving the goal post or chainging criteria for promotions, using HR jingoistic tricks (ever notice how territorial and autocratic HR Directors become) and generally finding other ways not to do either seems the norm. Several CEO's and their HR directors went so far as to say that denying raises and promotions kept the best employees from leaving, because these employees would (foolishly I might add) stick around thinking they would get the promotion. No wonder, lazy employees aside, the best are demotivated and make plans to move on within 2 years . It is incredible how badly we treat the best asset a company could have - its employees!!

     
     
     
    • Mark
    • Consultant

    This article is based on those industries where attendance is measured (showing up) and, as such, it only concentrates on one segment, i.e. manufacturing. As we all know, it is a very small industry and does not represent all the industries. It would be good for the author to communicate this point in the very first paragraph.

     
     
     
    • Steve Hollander
    • HBS class of 1977

    The Perfect Attendance award system in the company I managed for many years had a tremendously positive effect on morale and a positive sense of responsibility among the eligible employees. I inherited the program from the best "People-Focused CEO" I've ever known. I would never have thought to initiate it myself. But the results were astonishing. Needless to say, it was much more generous than the plan described in this article and there was no random factor of luck such as being eligible for a drawing.
    Only the so-called "non-exempt hourly employees" were eligible. The salaried, exempt personnel, i.e. managers and professionals (mostly engineers) were not eligible. Incidentally, despite the federal and state rules differentiating hourly and salaried employees, everyone in our company was treated as a "professional". Everyone punched a time clock. Everyone always received their full weekly salary regardless of days or hours worked. No hourly employee could be docked pay for missing hours or days without my personal approval--and I never approved it.
    The Plan: The year was divided into three trimesters of four months each. An employee who had no unscheduled absences and no more than a couple of minor "late arrivals" or "early leaves" would get $100 cash. A dependable employee missing time for a rare problem would always get a free pass. Employees who qualified for all three trimesters got an additional $100, for a total of $400 for the year. For hourly workers making $15 or $20/hour, that $400 meant something.
    In a typical trimester, 80% of the eligible employees qualified for the $100 award. Typically 60% qualified for the full year. Although the exempt employees were not eligible for the Perfect Attendance Award, the payroll dept. tracked it for me anyway because it was a small factor in their annual performance reviews. Among the more than fifty exempt employees not eligible for the awards, there was always only one guy who qualified (the same guy year after year).
    So, if a Perfect Attendance plan produces 80% compliance compared to 2% in the control group, I'd say it's a great plan.

     
     
     
    • Ramil Dinglasa
    • DM Student, Ateneo de Davao University

    Motivation is indeed complex and different approach must be applied to different types of organization and its employees.

    Tangible and intangible motivating factors should be a tandem for the company's rewards and recogntion program to be effective.

     
     
     
    • anonymous
    • Payroll Consultant, Self-Employed

    As with most things in life, it is a balance on the type of reward, the measurement for the reward and the timing of the reward against the objectives trying to be attained. The culture of a team, a business and the industry it operates in are among the myriad of influencing considerations, alongside religious and cultural expectations of the society you operate in. In Payroll teams for example, all remuneration packages are seen by the staff, with the disparate amounts and justifications being very capable of demotivating that team. Payrollers as a species will typically go to that nth degree to ensure everyone is paid accurately and on time because they too are their own customer and have total empathy with the employee not receiving their correct pay. Unpaid overtime is commonplace in payroll departments the world over. Motivating that team is therefore critical to a successful payroll service For the typical Payroll Manager it is difficult to give a structured financial reward as comparisons will always be made by the team members to other reward schemes for other areas of the business and so can easily be demotivating. There are other subtle ways of rewarding that make a tangible difference to someone's personal life. These I believe stem from the quality of leadership in recognising the team dynamic he/she has and shaping it appropriately. For example, one of my staff may be going away for a weekend break and I tell them to go at lunchtime on the Friday and enjoy the weekend properly without loss of pay or leave entitlement. Or another may have a dental appointment at 2pm and I'll insist they do not return to the office that afternoon. They all understand that they will never get back all the extra hours they do for me but when it is of most value to them personally, I'll try to give them something back. I never allow logs of additional hours to be kept as this provides the wrong focus, but base this reward on the commitment demonstrated by team members on an ongoing basis. The gratitiude I receive from hardened payrollers is evident in nearly all cases and demonstrates how the team culture can drive the appreciated rewards the team actually value. As ever, there are a multitude of ways to reward your team as a whole and as individuals without financial incentives. The best general tool I know is called a Personal Development Plan that, if you as the manager are motivated to put your energies into it, the staff member will in turn be motivated to deliver on their own development.

     
     
     
    • Raul Acevedo
    • Retired, American Embassy Santiago

    I find this text very telling. It provides a good and common sense view, on how a good award program should be administered, which if done poorly can produce the opposite result of what is desired. I agree that past good behavior is a good way to measure an award program. Cheers!

     
     
     
    • SANDEEP TODI
    • CEO, EMPORTANT TECHNOLOGIES

    We are a technology company and had to deal with tardy arrivals in the morning for several months now. We started by eliminating reasons for leaving late from work and ran it for a month, before pre-poning start/end time at the office by 30 mins. This small change now allows our team to go home much earlier and beat the rush hour. They are more relaxed in the evening and full of positive energy in the morning. We also introduced a small reward for arriving before official start times.

    All of these timed experiments have turned out well for us, because we tried to analyze the real problems and went after solutions instead of just introducing a reward program to solve a problem. It's not rocket science, but then HR need not be.

     
     
     
    • Carl P.
    • Learning & OD Consultant

    I agree with the study and concur that: rewarding non-absenteeism as a form of performance management; will - the majority of the time, result in the distribution of accolades that are unjustified and not correlated to the behavior intended, and/or desired.

    Hence, being on-time, or not being consistently absent from work - should be an expectation of your employment, and also apart of your own personal/professional work ethic. Employees are paid for their work/services rendered, and rewarding this with monetary compensation; will not provide any added value (unless, executed fairly across the board).

    However, if a reward system is preferred to motivate employees, or utilized as a deterrent for non-compliance. It should assess a variety of success/reward factors and measure the employees' cumulative work ethos - overtime (not just in the moment). Simply stated, the best "reward system" can be to provide a heart felt acknowledgement: Thank you or Great job - on a regular basis and when warranted. A simple concept that is overlooked and goes a long way (monetary value can be added to an award incentive, if applicable).

     
     
     
    • Anonymous

    Another effective way to demotivate employees is to Utilize Three C's - Criticize, Condemn & Complain.

     
     
     
    • Dwane Clifford
    • Sales & Business Devleopment Manager, Cobham Antenna Systems, Chelton, Inc.

    There is a very old and sometimes forgotten saying, "Don't Smack Me on the Hand if You Do Not Pat Me on the Back."

    Thanks and positive comments that you are doing, or have done a good/great job (or task) goes a very long way in motivation.

    I agree that rewarding someone that strives to "meet the minimum" stardard of a particular job is a large demotivator overall and unfortunately is practiced throughout my Industry as well as other industries.

    Another huge demotivator as mentioned in the article is putting all the winners in a raffle where only one winner is rewarded.

     
     
     
    • Charles Hilligrass
    • IT Management

    What is key to note here is that employees respond better to having a plaque, or special recognition, but why? People want to know that their management knows and understands the contributions that they bring to the company and conversely, the employee wants to know the value that they bring to their organization and the company. For example, a person reviewing and processing sales contracts for a sales team may not get a commission however, knowing that the sales team would not be able to meet their sales quotas or bring in revenue for the company lets that person know that they are an important member of the organization too.

    Each employee wants to be valued and each employee is different. Successful managers will understand how each employee wants to be recognized in order to maximize that employee's performance. Providing the wrong recognition, such as publicly recognizing a person that prefers to be personally recognized in private, may have detrimental effects on that employee.

    As this paper states, companies should also be aware that setting a goal that recognizes expected behavior will isolate those that are doing their jobs (particularly those that believe that they are performing better than most) in favor of getting lesser quality employees to do what they were paid to do.

    In cases where employees are not being as productive as they are expected to be, a program should be in place to address those issues on an individual basis. Effective leaders understand that it is their responsibility to ensure that their people are effective, productive and efficient. Cracking the whip will not solve this however, one on one discussions with a person to discuss their actions also lets them know that management is watching and paying attention to them. And that can be very motivating.

    Beth Armknecht Miller's comments about awarding employees is on point. Identify specific behavior and recognize it without setting a future goal to achieve (and for most, a check helps too!).

    To that I would add one more point. Recognition, both good and bad, is powerful. Those who are doing well will continue to do well, knowing that their work is appreciated and understood. Those with bad recognition will appreciate that someone is watching them, as it provides them with the opportunity to alter their behavior and can result in one of two outcomes: 1) it may improve the employee's performance and morale; 2) or identify an employee that may have a continual negative affect on performance and morale of the group, thus requiring separation from the group/organization.