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It’s a tricky question.
Do bonuses & cash rewards keep employees happy? Or is there a better way to motivate employees?
Reward Schemes for Routine vs. Non-Routine Roles
Bonus schemes may motivate employees depending on whether their role is routine or non-routine. Factory jobs are often routine – they may not require a lot of initiative. The same may be true for certain basic administrative roles.
More and more jobs in our economy, however, are non-routine: creative jobs, engineering jobs, marketing and sales jobs, etc. These jobs often require creativity, expertise, and self-motivation.
In his fascinating book Drive, Daniel Pink argues that reward schemes have not kept up with the economy’s shift towards non-routine work.
Traditional reward schemes include cash bonuses and commissions. For example: sew five dresses, and you’ll receive so much commission. Sew them within an hour and you’ll receive an extra bonus. Such a scheme assumes that people are motivated by extrinsic factors –money in this case.
Daniel Pink argues that non-routine tasks require a different reward system. For such roles extrinsic rewards can, in fact, undermine intrinsic motivation.
Intrinsic motivation relates to factors such as:
- Autonomy – the ability to plan and direct one’s own work;
- Mastery – the ability to develop yourself and to get better at your job;
- Higher Purpose – why else do so many people work for free as volunteers?
Cash rewards such as bonuses – Daniel Pink argues – mainly work for routine tasks. For non-routine tasks, bonuses may reduce performance because they diminish intrinsic motivation.
If bonuses are counter-productive for such tasks, what works? An “Employee Suggestion Program” (ESP) is one answer.
How an Employee Suggestion Program Contributes to Employee Happiness
An ESP recognizes that good business ideas can come from all employees.
A successful Employee Suggestion Program nurtures the intrinsic motivation of employees, because it:
- Increases autonomy of employees as they can increase their say in how the company is run, what products are developed, and how work processes are improved.
- Helps employees to get better at their jobs by allowing them to provide suggestions for job improvement.
- Motivates employees to contribute to the company’s success – both within and outside their roles. An ESP can make employees feel part of the company.
In short: an ESP can aid employee happiness and motivation by increasing autonomy & mastery, and offering the opportunity to contribute to the company beyond narrow job responsibilities.
Should Employee Suggestion Programs Offer Cash Reward?
Employee rewards for good ideas can be cash or non-cash.
Recognition in a monthly newsletter, a hand-written thank-you note from the manager or company executive, or a mention in a speech make employees feel valued and may provide excellent incentive to come up with good suggestions.
Providing cash rewards, however, can reduce (yes, reduce!) the creativity of employees, because it can diminish intrinsic motivation. We will dive into this topic more deeply in our future posts.
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The Truth About Implementing an Employee Suggestion Program
Employee Suggestion Schemes can contribute to employee motivation and happiness. However, an ESP per se doesn’t make employees happier. A badly implemented program can, in fact, undermine employee motivation.
In our future posts, we will provide practical tips and step-by-step processes for implementing successful Employee Suggestion Programs at your organization. Sign up now using the box at the top right – receive weekly email notification with our new posts.
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