Employee motivation: is money the only answer?
With employee engagement at rock bottom, finding new ways to motivate staff is proving a real headache for many companies. Increase wages? Offer more benefits? More flexibility? What works best? Traditionally, employers have used monetary rewards to boost employee engagement and motivation, but studies have shown that monetary benefits are losing their appeal. Instead, recognising employees’ efforts is appearing to be the most effective in motivating employee’s.
Money is a short-term motivator and has limited appeal
Yes, money is important, but that comes as a standard expectation with any job. People expect to be paid a fair wage, and without it, no amount of ‘perks’ can attract or retain employees. This is particularly important in countries with weaker economies, such as Poland and Brazil, where take home pay is still the number one factor in employees decision to move or stay with their existing employer.
However, in stronger economies with stricter laws enforcing a minimum wage, such as the UK, financial compensation loses its influence. The ripples of motivation that follow a wage increase fade away after two or three weeks. A recent survey asked more than 200,000 employees from around the world their top ten factors for on-the-job happiness. Results show that people place appreciation for their work as the most important factor for on-the-job happiness. An attractive fixed salary was only eighth on the list.
Benefits outrank salary
So what is the most effective way for a company to show its appreciation? Research shows that nearly four in five employees - 79% - would prefer new or additional benefits as opposed to a pay increase.
Yet, the kind of benefits people prefer varies depending on a wide range of factors. An individual’s profile, such as age and gender, as well as their own personal preferences can determine what incentives work best for them. Studies have also shown that trends for preferred benefits change between countries. For example, a 2016 Sodexo Benefits and Rewards study conducted in five countries shows that, in Brazil and India, access to training courses can boost a company's appeal just as much as the financial benefits it offers. Whereas, in the United States - the only mature market in the world that does not provide universal paternity leave and offers fully paid maternity leave to just 9% of mothers - time off to raise a newborn baby could be invaluable to expecting parents. Thus, finding the right rewards to increase the productivity of your workforce becomes increasingly difficult.
Incentive and recognition programmes are the answer
Incentive and recognition programmes have been proven as effective motivators without the need for financial benefits. While the range of incentives can be vast, workplace experts recommend one characteristic above all: adaptability
The ‘ultimate reward’ can look very different depending on your perspective. Giving employees a choice in how their hard work and dedication will be rewarded is a good way to boost employee engagement. More and more companies are getting flexible and creative with their employee recognition offers, ranging from company-sponsored fitness programs to free meals and even outside-the-box perks such as egg-freezing.
According to the Incentive Research Foundation, the right incentive program can improve team performance by as much as 44%, boost employee engagement by 27% and also attract higher quality employees. SMEs and larger companies alike can reap huge rewards from effective incentive recognition programmes. A 2015 Sodexo Benefits and Rewards global survey revealed that 74% of SME leaders who had introduced such programmes had seen an improvement in hiring, with 88% claiming a jump in productivity and 71% an increase in sales.
The all-important human factor
Not only does investing in incentives help boost recognition: corporate culture also plays a key role in enforcing and maintaining motivation. When employees feel appreciated, they gain a stronger sense of being part of the company. This in turn nurtures long-term benefits such as higher employee engagement, morale, loyalty and productivity. Some studies report that productivity can jump as much as 30% when team members receive one piece of praise a day.
A McKinsey study also showed that motivators such as attention from leadership or the opportunity to take on leadership roles were just as effective as cash bonuses, pay rises and stock options. What is more, praise from a manager was ranked as the top motivator by 67% of workers - outweighing financial incentives and non-cash rewards.
When thinking about motivating employees, the first incentive that springs to mind tends to be money. Yet studies have shown that this incentive is short lived. Instead non-monetary incentives have the potential to go a lot further in motivating and engaging staff.
Whilst incentives are always a good solution when it comes to employee motivation, the effects of showing your appreciation for employee’s efforts through a face-to-face ‘thank you’ should not be underestimated. The benefits to employers are also evident, not only is it simple and personal – it’s also completely free.