Imagine you're kicking off the first day of your workweek. You receive word the company is experimenting with rewards to boost employee engagement and performance. You'll receive one of three possible types of rewards 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:
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a pizza,
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a financial reward of about $30, or
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personalized recognition from management.
Assuming it isn't lunchtime, or you aren't short on what to make for dinner, which would you choose?
Experimenting with Employee Engagement
In fact, this experiment was done for one work week at an Intel factory in Israel. They included (a very sad) control group, who received no incentive, to precisely measure the effects of each reward on 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 (use this to justify 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 higher than the other rewards and the control (no incentive) groups.
The biggest surprise? Pay underperformed the other two rewards even on day one – and continued to decline throughout the week. By the end of the week, workers in the pay condition were underperforming the control group (remember they received no incentive), by as much as 13 percent!
Why were compliments more effective in rewarding performance than pay or pizza? And why did pay incentives lead to lower performance?
Building Engagement
To understand why compliments outperformed pizza and pay, it helps to step back and look at what actually drives employee engagement. At its core, engagement reflects the extent to which people feel committed to and energized by their work. Engaged employees don’t just do what’s required; they persist through setbacks, adapt when conditions change, help others succeed, and continue to pursue goals even when results aren’t immediate.
These behaviors—resilience, grit, and discretionary effort—are exactly what organizations depend on for sustained performance.
Incentives play a role in shaping engagement, but not all incentives influence people in the same way. Tangible rewards like pizza or cash can create a short-term boost by sparking immediate interest or novelty. As this study showed, pizza worked—briefly. But novelty fades quickly. Once the reward becomes expected, it loses its motivational impact and no longer fuels effort when work becomes difficult or monotonous.
That’s why varying motivators is important, but variation alone isn’t enough. The most effective incentives reinforce a deeper sense of purpose and identity. A pizza party for hitting a sales goal might spark energy for a day or two. Recognition for mastering a new skill, helping a teammate, or living out company values works differently—it strengthens the psychological connection between effort, identity, and impact. Over time, that connection is what sustains motivation when rewards are no longer immediate or guaranteed.
Recognition as a Catalyst for Resilience and Persistence
Recognition is uniquely powerful because it signals that someone’s work matters, and that they matter. When leaders acknowledge effort, improvement, or contribution, not just outcomes, they reinforce a sense of competence and belonging. These signals are critical under pressure.
Resilience isn’t simply the ability to “push through.” It’s the belief that continued effort is worthwhile even when results are slow, feedback is ambiguous, or conditions change. Recognition strengthens that belief. When people feel seen and valued, they are more likely to persist after a setback, remain engaged during periods of uncertainty, and re‑commit after failure.
Photo by Ian Schneider on Unsplash
This helps explain why personalized compliments in the study produced sustained performance gains across the week. Compliments do more than reward behavior; they affirm capability and contribution. They tap into intrinsic motivation—the internal desire to do meaningful work well. Unlike pay, which can shift focus toward “Is this worth it?” recognition keeps attention on “This is important, and I’m capable of making a difference.”
Importantly, recognition has a cumulative effect. While the pleasure of pizza fades and the satisfaction of pay quickly becomes the new baseline, the emotional impact of feeling appreciated lingers. It builds confidence, reinforces commitment, and supports persistence in the face of fatigue or challenge.
Yet gratitude and recognition remain severely underutilized. While more than 80 percent of employees say they would work harder if they felt more appreciated, fewer than 10 percent report regularly receiving expressions of thanks or recognition from their leaders. That gap represents a significant missed opportunity—not just for engagement, but for resilience and long-term performance.
Why Pay Often Undermines Employee Performance and Engagement
The study’s findings on pay mirror what decades of research have already shown: financial incentives can crowd out intrinsic motivation. When people begin to associate effort primarily with compensation, their internal drive weakens. Over time, work becomes transactional rather than purposeful and engagement wanes.
This dynamic also helps explain why performance in the pay condition declined so sharply—eventually falling below even the control group. Once money becomes the motivator, people tend to ask for more of it, adapt to it quickly, and feel less motivated when it doesn’t increase. Worse, strong financial incentives can unintentionally encourage short-term thinking or even unethical behavior, as individuals focus on maximizing rewards rather than upholding values or long-term goals.
We’ve seen the real-world consequences of this dynamic in high-profile failures where aggressive incentive structures eroded judgment and culture. Pay, of course, matters—it signals fairness and value—but as a motivator for sustained, resilient performance, it is far less effective than leaders often assume.
This is where Maya Angelou’s words ring especially true: “People will never forget how you made them feel.” Feeling valued, respected, and appreciated stays with people far longer than the memory of a paycheck or a free meal; and those feelings directly influence how much effort people are willing to invest when work becomes challenging.
Maximizing Employee Engagement and Resilience
While defining engagement and understanding its drivers is a useful starting point, the real impact comes from understanding the employee experience and the leadership they receive. Engagement is shaped by daily interactions, expectations, and signals—many of which leaders are unaware they’re sending.
When we support organizations with employee engagement (often through employee listening and surveys) we illuminate both the inputs of engagement (such as recognition, trust, clarity, and growth) and its outputs (including resilience, discretionary effort, collaboration, and intent to stay). These insights allow organizations to pinpoint which teams feel confident, capable, proud, and connected—and where those perceptions break down.
From there, we partner with leaders to design targeted programs and action plans that strengthen engagement where it matters most.
Access a free editable action planning template for building engagement.
The result isn’t just higher productivity, but a workforce that is better equipped to persist through change, recover from setbacks, and perform at a high level over time.
