Employee motivation is a mystery to many employers. Some employees consistently underperform, procrastinate, or lack initiative, which can be frustrating and expensive. HR consultants McLean & Company estimate that the cost of each disengaged employee is $3,400 per $10,000 of annual salary for the company, and the annual cost to the U.S. economy is $350 billion. As a result, when leaders see disengagement, they often implement incentives programs to solve the problem. Unfortunately, it’s not easy (or low-cost) to know which of the many available programs will be effective for the organization.
However, human behavior is not a black box. Understanding behavior science can help executives understand why certain incentives fail when others succeed, and it can help to shape a tailored, more effective strategy based on individual needs and preferences. Not everyone responds well to the carrot-and-stick approach: High performance yields commissions or bonuses; low performance risks termination. Some companies have tried wellness programs, social events, and pizza parties. Even so, employee engagement continues to trend down, suggesting that a kind gesture from an executive is not necessarily rewarding to the employee.
The Disconnect Between Executives and Employees
Generally, employees want higher pay and more flexibility. Unfortunately, not all companies are prepared or able to increase pay, and not all jobs can be work-from-home or offer flexible scheduling. So how can employers motivate employees when what those employees most want is not available or practical? It’s easy to find lists of ideas for employee incentives, but it’s not always so simple to determine which of those ideas will be effective, if any.
Research has found that fear of termination or punishment does not effectively motivate employees and may worsen their performance. An employee who focuses on whether or not they are getting fired tomorrow is likely not completely focused on the task at hand. Offering employees new titles shows up on many exhaustive lists of incentive program options but some employees find this aversive or insulting, especially if the new title feels like a promotion without a pay increase.
Some companies have tried branded apparel incentives, wherein employees receive company gear in exchange for meeting goals or increasing productivity. This is not, however, always a winning strategy with employees, and the idea popped up in a Reddit thread about grievances with company incentives. Other poorly received incentives from the thread include certificates of appreciation, points programs, and candy bars. Evidently, there is a disconnect between what executives hope will be motivating and what employees appreciate.
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Behaviorism Offers a Different Lens
Developed by B.F. Skinner in the 20th century, behaviorism is the theory that behavior can be changed by the consequences that follow it. In business, an employer can change employee behavior through a desirable consequence, which Skinner called a “reinforcer.” A reinforcer is anything that increases a target behavior over time or long-term. On the flip side, anything that decreases behavior over time is considered a punishment.
Behaviorism can be used to understand why an incentive program fails. The key is that one person’s reinforcer is not necessarily rewarding to another person. The first entry in this rather hostile Buzzfeed piece is a clear example of a disconnect between employer and employee: A person seeking higher pay instead received $500 in gift cards. Although the employer thought it a nice gesture, the employee found it offensive (echoing the 57% of 2021 resignations that cited feeling disrespected at work). The gift thus acted as a punishment. Rather than encouraging the employee to continue performing well, the gift cards decreased performance and engagement.
Understanding Behavior Can Help Improve Incentives
Going forward, this employer might first conduct a preference assessment to determine what an employee actually wants. Surveys or suggestion boxes are practical ways to do this. Second, it is valuable to observe behavior over time. If the employee’s efforts and engagement do not increase following periodic gift card receipts, the gift card incentive program is not effective for that person. Ultimately, it does not matter how much the incentive dispenser values the incentive. The important thing is what the employee values.
Just as executives must be mindful of intended reinforcers being poorly received, they must also monitor unintended reinforcers or punishments. Executive behavior will affect employee behavior, for better or for worse. Consider a common scenario drawn from behavioral science practitioners’ work with children: A child demanding his mom’s attention while she is busy. If his mom is on the phone, she won’t hang up when he calls her name. However, if Mom is on the phone and the child hits his brother, she will scold him. The child now understands that hitting his brother will lead to attention.
At work, if employees work hard but it goes unnoticed, lack of attention may punish their high engagement. Alternatively, if a leader permits poor professional behavior in favor of high engagement and work performance, this may punish other employees who struggle to work with or resent the offender. Monitoring how executive and manager actions change employee behavior is useful for determining employee motivations.
Sometimes it is also useful to start with the behavior change and identify what came before it. If an executive or manager finds that engagement behaviors are increasing or improving, but the cause is not immediately apparent, there may be an unintended motivator. Once this is identified, it can be more widely implemented. For example, 65% of employees report not feeling recognized or appreciated at work. Recognition is not tangible, which makes it more difficult to track, but if the Employee of the Month is a consistently high performer, that person may be reinforced by the recognition received.
How to Move Forward
Ultimately, employees desire appropriate compensation, some flexibility, and respect in the workplace. The desired goal of behaviorism in this case is not to manipulate them into increasing performance; rather, it is to reward productivity and improve working conditions at an employee-specific level. Determining what they want, individually, enables companies to create more effective programs.
When possible, a pay increase is almost universally desirable, but it is not the only piece of the motivation puzzle. Assessing individual motivations and aiming to understand employees and their personal needs enables executives to tailor incentive plans, which can save time and money while improving employee engagement. Some motivating factors outside of compensation may include gift cards, but for many these factors are adequate job support, understanding and flexible managers, and positive interactions with supervisors and coworkers. A positive culture wherein employees are individually complimented and recognized should not be discounted.
Finally, it is useful to remember that an incentive only acts as a reinforcer over long periods of time. Increased performance for, say, a week which then drops off does not indicate reinforcement. To best determine effectiveness, it is useful to watch for consistency over the employee’s tenure and frequently reassess priorities and preferences.