Money Isn't the Way to Motivate Employees Find Out Why!

Jul 16, 2022

Research shows that personal recognition is more effective than monetary rewards in maintaining long-term performance. Yet many managers steer away from performance-based rewards because they’re seen as expensive.

There are several valuable approaches for supporting and encouraging high individual performance. For example, we teach many managers coaching and performance feedback skills. And while a full-fledged performance management program is best, in its absence, we encourage organizations to begin using cost-effective, appropriate rewards to motivate and acknowledge results-driven employee performance.

Understanding the passions, drivers, and the “what gets me out of bed each morning” question for your employees is critical. Why? Because motivated employees are proven to drive business impact—they experience lower turnover and absenteeism and ultimately stronger business outcomes as measured by sales and profit performance. At this point, you may be asking yourself: How can I effectively motivate my employees at scale, given their different internal motivators, interests, desires, and needs?

“We hear from many bosses who believe that the only significant expression of gratitude they can offer people is padding their wallets with raises and bonuses. This comes from Adrian Gostick, co-author of Leading with Gratitude: Eight Leadership Practices for Extraordinary Business Results (Harper Business, 2020). “It’s vital to pay people appropriately, but there’s only so much money to go around. That makes gratitude all the more meaningful and useful as a leadership tool.”

Only 1 in 3 people feel they were well-recognized the last time they went the extra mile at work, according to the TINYpulse Employee Engagement Report. A mere 25 percent of the workers surveyed said they felt as though their employers consistently valued their hard work—a drop of 16 percentage points from the previous year. About 33 percent said they felt undervalued.

Showing gratitude isn’t always easy. It can make managers nearly as uncomfortable to praise employees as to criticize them, Gostick says.

An Attitude of Gratitude

Verbal praise doesn’t have to be elaborate; it just needs to be specific. Paul White, the co-author of The 5 Languages of Appreciation in the Workplace: Empowering Organizations by Encouraging People (Northfield Publishing, 2012), offers three tips for praising employees:

Always use the person’s name.
Include details about the notable behavior or action. Spell out why it was important to you or the company.
Deliver the praise promptly (no later than the next day).

Of course, every employee is different, so managers should consider the individual when deciding how to show appreciation. Some employees are motivated by the opportunity to take on new, challenging work, a sign that their manager trusts and relies on them, says Chester Elton, co-author with Gostick of Leading with Gratitude. Meanwhile, more socially oriented employees might appreciate a lunch outing with their co-workers to celebrate a win.

It’s also good to back up your words with gestures. If possible, reward employees by giving them more flexibility in their schedules or by putting them on the path to a promotion. And don’t forget to praise employees for their personal attributes, too.

“We have to remember that employees are people first,” White says. “If we only treat them as work units, they will feel devalued. You can say, ‘Thank you for your good sense of humor. It really helped keep the team going during a stressful week.’ ”

Those who have taken our Inspiring Leadership course know that motivating their team members doesn’t have to be complicated. As managers, we understand that the process of employee performance is actually very simply driven by behaviors that have the following elements:

An individual must know and agree with what is expected of them. An example of this might be a monthly sales target and actions they must take to achieve it.
The individual’s effort must result in some kind of performance standard, such as reaching or exceeding a sales goal.
Associated with that performance, the individual obtains some kind of reward.

In my humble opinion, you have to develop the mindset of catching them doing it right often enough to keep a positive balance in their “Emotional Bank Account.”

Here’s a quick test of where your mindset is now. What do you see in the following math formulas?

2x2=4

3x3=9

4x4=15

5x5=25

If you saw that the 3^rd one was incorrect right away. Well, you’re right, but that right there is what’s wrong with the common manager's mindset.

They overlook the fact that 3 of the formulas were RIGHT! We naturally are looking for what is wrong versus what is right.

Suppose you were to be more intentional in your daily management activities, looking for what they are doing right and pointing them out. In that case, you will become a master motivator much more rapidly. So simple and so infrequently done. No one goes to work every day wanting to do a lousy job.

Yet often, that is all they hear about in the way of feedback from their manager. They only hear what they are doing wrong compared to the majority of the actions or accomplishments they are correctly performing. Reverse your feedback approach, and you will be motivating your employees at ZERO Cost!

1001 Ways to Reward Employees

If valued by and appropriate to the individual, rewards increase energy and enthusiasm, which can be carried into other activities. The process then becomes an expansive cycle of performance and increased individual capacity. In short, managers can strengthen the relationship between effort and continued performance by providing g appropriate, timely rewards to individual employees.

His highly readable book 1001 Ways To Reward Employees points to research by the Council of Communication Management, which confirms that recognition for a job well done is the top motivator of employee performance. He offers three guidelines for effectively rewarding and recognizing employees: Match the reward to the person, match the reward to the achievement and be timely and specific.

Buy lunch for the person and three coworkers of their choice
Purchase tickets to a movie you’ve heard they want to see and thank them with the tickets
Hand write a personal “thank you for the effort” note
Call the person into your office just to offer praise or thanks for a job well done
Award a silver pin or similar prize for reported positive customer comments
Rent a sports car for the employee to drive for a week
Give the employee their birthday off with pay
Surprise the person who made an extra effort on a project with event tickets

Lastly, it is very easy to miss the impact and importance YOU play on their lives.

It's easy to do, and I’m as guilty as anyone of losing sight of this. But you are very influential on their lives and their attitudes. Believe me, almost every time you pay one of your employees a compliment on a job well done or show appreciation for them doing their jobs well, they cannot wait to share that with a spouse, significant other, parent, or friend. It’s happened to you, and you know you were motivated by the comment and could not wait to share it with someone important to you.

As a motivator, you are your own secret weapon. Time with you outside of work for lunch or coffee; maybe dinner is a huge motivator. Time to get them to know you a bit and you to get to know them is a significant deposit into the motivational back account.

Don’t underestimate the VALUE OF YOU and YOUR WORDS.

How about this as a goal for yourself? Go to work tomorrow with the intentional mindset to find someone working with you and Make Their Day!

But rewards in and of themselves are not foolproof. Remember that your team is first and foremost individuals. As such, they have unique preferences and needs. You must provide appropriate personalized recognition. And, of course, don’t lose sight of the need for and benefits of a company-wide performance management program.

"Well constructed recognition settings provide the single most important opportunity to parade and reinforce the specific kinds of new behavior one hopes others will emulate." Tom Peters

John Ball, Service Training Manager, American Honda Motor Company, best sums up the central message of this Tip Sheet. “I try to remember that people—good, intelligent, capable people—may need daily praise and thanks for their job.

I try to remember to get out of my chair, turn off my computer, sit or stand next to them and see what they’re doing, ask about the challenges, find out if they need additional help, and offer that help if possible. Most of all, tell them honestly that what they are doing is essential to me, the company, and the customers.”

I hope that this blog is of value to you, that it will start you thinking, and most of all, that it will provide the incentive you need to continue your efforts to recognize superior performance with your team.

Podcast Page

About the author:

Vaughn is the co-founder of Results-Driven Leadership. He is a leadership development expert, podcaster, and author. His methods are brought from his real-world experience working on the front lines and living the role of being a high-impact leader and manager. His coaching and training programs offer no theory, just common-sense advice and direction. He is a former executive with CarMax, the world's largest and most respected company in the auto industry, and is a Fortune 100 Best Places to Work.

Vaughn's mission is to improve the impact of executives and other managers by increasing their knowledge, skills, and abilities.

His motto is "No matter what business you're in; you're in the people business."

Learn More About Our Online Training Courses

GET a Free DISC Profile