In the early 1970s, psychologist Edward Deci conducted an experiment with 24 young students where he asked one group to solve a series of puzzles in exchange for money, and the other group to solve the same puzzles for no money.
What happened was that the group that received the money for their efforts lost interest in the task very quickly; while the group that received no cash reward solved the puzzles faster, carried on with the task for longer and reported higher levels of satisfaction for being asked to do the work.
Using money to motivate people is expensive and ineffective. There is no proof that it keeps people longer at a company and doesn't make them more productive.
A far better way to get the best out of people is to instead focus on their intrinsic motivators, which Daniel Pink in his book Drive suggests are: Autonomy, Mastery and a Sense of Purpose.
Autonomy means that you treat employees as professionals and create the conditions under which they can determine for themselves how best to make a contribution and then guide and coach them along that journey.
Mastery is the desire we all have to get better and more skilled at whatever it is that fires our passion up in the work that we do. Companies that offer employees the scope and upward trajectory to further their mastery of their craft tend to hold onto those people.
A sense of purpose is the big picture vision that employees dream to be a part of. It's that compelling reason to jump out of bed in the morning, knowing that you are set to make a valuable contribution towards a group effort that makes the world a better place.
To be clear, this doesn't mean that people will be willing to work for a company for zero compensation. What it means is that beyond a certain threshold of income, there is no discernible improvement in worker productivity, performance or retention under conditions of increasing levels of remuneration.
What this means is that investing money in a good company culture is a far better strategy of keeping your staff happy than giving them bonuses. It's also a very powerful way to improve your cost structures and yield better margins in time.
Clarify your strategic intent
Over the years, Jonathan Cherry has consulted to numerous organisations helping them clearly define their strategic intent and strategy map for accelerated business growth and resilience in uncertain times.
If you need a facilitator to take you through this process for your organisation, please get in touch here to chat with Jon.