4 tips for debunking rewards myths

rewards

Is there a more challenging or perplexing HR task than that of designing and managing an effective rewards system? I have compared notes with dozens of colleagues and clients on the issue of rewards systems. We all have had our moments of trial and error with very little (dare I say) “reward” for our efforts, writes Dave Hanna

In recent years, however, greater insights and expertise have emerged in this domain. Let me identify some of the great “myths,” breakthrough principles, and practices you might apply to have more success in the future.

Myth #1: “People are motivated by money.”
My friend and colleague, Alan Colquitt, a veteran PhD. with 32 years’ experience in corporate HR research roles, offers an explanation for this myth:

“We are prisoners of our own flawed assumptions, beliefs, and mental models. We learned in basic psychology and economics classes that people are motivated by money and tying rewards to individual performance will improve results.

“These programs have not been broadly successful… And even when they do work, they can have undesirable side effects and unintended consequences like increased competition, reduced intrinsic motivation, and other bad behaviour…”

As Alan points out, the myth is the belief that people are motivated only by money. Get the money right and the problem will be solved. In fact, people are motivated also by many other things (many of which are also desperately needed by their organisations).

Tip #1: “Pay people enough money so that it is no longer an issue,”

says author Daniel Pink. The question is, “how much is enough?” Those, whose earnings are comparable to others in their community and industry for similar work, seldom have an obsession with earning more money.

Myth #2: “Rewards are needed to motivate people.”
Alfie Kohn explains this myth, “You can’t motivate another person,” he says, “so framing the issue that way virtually guarantees the use of controlling devices.”

In the 1960s Pay for Performance systems were hailed as the big innovation in rewards. The biggest challenge with pay for performance is to avoid defining performance too narrowly – at the expense of other critical performance elements.

Tip #2: Don’t be seduced into believing that controlling devices such as individual pay for performance or individual bonuses are the only way to motivate high performance.
The controlling devices are all extrinsic motivators: rewards are contingent on performance. Intrinsic motivators are deeper and longer lasting. These motivators have been described best by Edward Deci as “the need to feel effective or competent in relation to one’s environment.” Effective reward systems are comprised of both extrinsic and intrinsic motivators.

Myth #3: “You get what you pay for.”
“One of the most thoroughly researched findings in social psychology is that the more you reward someone for doing something, the less interest that person will tend to have in whatever he or she was rewarded to do.” – Alfie Kohn

So, you may get what you pay for, but the spark dissipates over time. Meanwhile, you might not get many other things that you also need!

“We are prisoners of our own flawed assumptions, beliefs, and mental models. We learned in basic psychology and economics classes that people are motivated by money and tying rewards to individual performance will improve results.

Tip #3: Compensate associates for a broad spectrum of contribution – individual, team, organisation, and company performance – mirroring what the organisation and marketplace require to survive.

For example:

  • Research indicates bonuses motivate performance only for mechanical skills.
  • For cognitive skills, bonuses actually drive poor performance.
  • Designing roles for autonomy, mastery, and purpose drives cognitive skills.

Myth #4: “I know my people.”
How well do you really know what motivates each of your people? Consider this research conducted by Professor Ken Kovac at George Mason University:

The 10 elements here are a mixture of extrinsic and intrinsic motivators. The results of Ken’s research are representative of many similar studies I have seen. For example, supervisors almost always list “good wages” as number one on their employees’ list; yet “good wages” are usually no better than number five on the employees’ list. I realise the preferences of your people may be different from this study. Therefore, read carefully Tip #4!

Tip #4: Compile a profile of the key work-related needs of people in your organisation and then design your purpose/goals and the work itself to align with your people’s intrinsic motivation:

The product of your design work will be an improved rewards system.

Image Source: Pixabay