Are you getting the most from your employees? If you rely on financial incentives alone to boost results, you may be doing more harm than good. To improve employee performance, you must pay as much attention to your company’s culture as your economic indicators.
When Money Misses the Target
People are motivated by a lot of factors. While money is the most universal and quantifiable motivator, it turns out to be one of the most detrimental.
According to a recent MIT study on the limits of monetary incentives, larger cash rewards lead to poorer employee performance. Financial incentives only boost performance for rote, mechanical tasks.
If your work requires critical thinking and creativity, you need to motivate your employees with something more powerful but less tangible than money. So where do you find that?
The Secret to Performance: Autonomy, Mastery & Purpose
As critical as we all believe money is to our happiness, you begin to see diminishing returns after basic needs are met. People have deeper needs that money can’t fill. According to Daniel Pink, author of Drive, the ideal workplace promotes autonomy, mastery and purpose.
- Autonomy – People like to tinker and follow their intuition. Companies like Google and Atlassian set aside time for self-directed exploration that often turns into new products and solutions.
- Mastery – People like to improve and be recognized for their skill. Linux, Wikipedia, WordPress — these platforms owe their existence to thousands of contributors who volunteered their free time to showcase their mastery.
- Purpose – People want to understand what their work accomplishes and how it affects the world. A study by the Wharton School of Management shows that workers who understood their impact drew twice as much revenue to the company as those who didn’t.
Outside the Incentive Box: Socially and Environmentally Driven Business
Many proponents of sustainability focus on the savings of a greener supply chain or a more efficient product. However, becoming a more socially and environmentally conscious company will foster the autonomous, purposeful working environment that motivates your employees and boosts your bottom line.
This BusinessEarth-style of company will benefit employees, society and your bottom line. You can’t ask for better performance than that.