Imagine you work at a restaurant and are coming in for your first shift of the week. You receive a note stating the company is experimenting with incentives and indicates which of three rewards you will receive if you meet a specific performance goal for the day. You will receive the same reward for each shift that week if you exceed the performance target. The three possible rewards are: a pizza, a financial reward of about $30, or a compliment from management. Which reward would be the most appealing and motivate your performance?
The Experiment
This experiment was done for one work week at an Intel factory in Israel. A control group, who received no incentive, was included to measure how each reward (pizza, pay, or compliment) influenced production. The results? Pizza and compliments led to significant gains in productivity. In fact, the productivity increase for the pizza condition surpassed the cost of the pizza (you can use this as justification for your next team pizza party). Performance gains for pizza, however, gradually waned over the course of the week, while productivity for those in the compliment condition remained consistently higher than the other rewards and the control (no incentive) groups. What might be most surprising is that pay underperformed the other two rewards even on day one – and continued to decline throughout the week. By the end of the week, people in the pay condition were underperforming the control group, who received no incentive, by as much as 13%!
Why were compliments more effective in rewarding performance than pay or pizza? And why did pay incentives lead to lower performance?
Building Engagement
Let’s take a moment to look at the recipe or framework for employee engagement. People who are engaged feel committed to, and enthusiastic about, their work. This is important because it results in behaviors that are important to performance: showing resilience and grit, helping others, and aggressively pursuing goals. Varying motivators and incentives is one strategy to increase engagement. Pizza may work as an incentive for a couple of days but is not a long-term strategy. By piecing together different incentives – a pizza party for a sales goal one week, recognizing professional development efforts the next – you can consistently encourage actions that are aligned with performance and your culture – which is what you need to build your brand and achieve your definition of success.
One of the most powerful ways to build engagement is for others to communicate how their work is meaningful and makes a difference. Knowing others appreciate and value our contributions gives our work and effort greater meaning. Expressing gratitude is one of the most neglected means to build engagement. While upwards of 80 percent of people say they would work harder if they were showed more appreciation, only 10 percent of people say they regularly show their team gratitude for their contributions.
The results that this study found for pay mirror what you may have observed, and researchers continue to find, that financial incentives can diminish our internal drive to achieve while increasing our dependence and hunger for additional compensation. Further, as we may have seen with the recent Wells Fargo Bank scandal, strong financial incentives can increase unethical behavior and willingness to violate the values and standards of your company’s culture. The effects of pay are short lived – people quickly adapt to the incentive or new level of compensation and believe it is justified for their level of performance.
This reflects one of Maya Angelou’s famous statements, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” Feeling appreciated and valued stays with your team far longer than the memory of a pizza or paycheck.
Next Steps
While we’ve covered a definition and framework for thinking about engagement, measuring how your team perceives your leadership and work environment will lead to the most useful insights for change. Corvirtus Employee Experience and Engagement Surveys highlight the inputs and outputs of engagement to provide specific suggestions for improving the employee experience – resulting in increased engagement, trust, and productivity. We can help you determine which job groups, locations, and departments feel confident, competent, proud, and a sense of belonging – and where these perceptions are falling short. Intentions to stay and perform are also measured and we can work with you to build programs and action plans that will foster accomplishment and teamwork. The first step in increasing engagement, is understanding what drives it – learn more in our whitepaper: The “Roots” and “Fruits” of Employee Engagement.
Resources
Pizza boosts staff productivity more than money. International Business Times. (September 1, 2016).
The Gratitude Diaries: How a Year Looking on the Bright Side Can Transform Your Life. Janice Kaplan. (2015).
When performance-related pay backfires. London School of Economics and Political Science. (June, 2009).
