Why bonuses don't motivate employees

Jenny Harrison




In our sessions, we talk about how important it is to get to know each individual and to understand what motivates them, in order to get the best out of them (and minimise the risk of employment problems). Some will be more motivated by money, and others less so, and of course, this will vary according to the sector. However, they will probably not be as motivated by money as many companies think they are.

In this clip, Dan Ariely (James B. Duke Professor of Psychology and Behavioral Economics at Duke University and author of "Payoff: The Hidden Logic That Shapes Our Motivations) discusses how compliments and recognition more effective than bonuses motivating employees to work harder, like many companies believe. https://youtu.be/rbI8FDRsqfw

This is an idea that was also proven in Frederick Herzberg's research into motivational theory. His research showed that salary/bonus is one of the "hygiene" needs (or maintenance factors) in the workplace. People will strive to achieve "hygiene" needs because they they are unhappy without them, but once satisfied the effect soon wears off - satisfaction is temporary. Organisations often fail to understand that people are not "motivated" by addressing "hygiene" needs. People are only truly motivated by enabling them to reach for and satisfy the factors that Herzberg identified as real motivators, such as achievement, advancement, development, etc., which represent a far deeper level of meaning and fulfilment.

So, leaders and managers - pick up the phone or even better, drop by someone's desk, and give them a compliment or recognition. It's easy and the research shows, it works!