Monetary Bonus Incentives Make Knowledge Workers Less Effective (or, Give ’em a Fricken Innovation Bonus!)

Monetary Bonus Incentives Make Knowledge Workers Less Effective

I have found this to be true in my own experience. The way to really engage teams and get them motivated to do great things is to empower them, build trust with them, and help them recognize they are awesome and doing awesome things.

I got a bonus in my paycheck this year. Meh. It doesn’t motivate me, and neither do the annual performance reviews. What I REALLY care about is what my customers think of me, what my team thinks of me and how they are doing, and that my management and company care about and value my efforts.

Watch this and comment!

What are your experiences with monetary incentives for knowledge work?

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Josh Nankivel

And how to motivate project teams too! Nearly every role in a project environment these days includes knowledge work, if not solely knowledge work.

Peter Sperry

I’ve earned various incentve awards and attaboys for work over the years. Often the nonmonitary awards were the most motivational. But when I go on vacation and try to pay the airfare with attaboys, it doesn’t quite work. That is when I tend to remember, oh yeah, Joe or Suzy or whoever got cash and I got an attaboy. If nonmonitary awards are given in addition to cash or because cash is simply not available, workers understand and appreciate them. If nonmonetary awards are used instead of cash because senior executives are cheap, workers start wondering if they should find more appreciative employers. BTW, ever try to finance a retirement with a lifetime of attaboys?

Terrence (Terry) Hill

Nice review of Daniel Pink’s book Drive. I’m a big fan of his “Office Hours” podcasts that he hosts. With only 1% of salary to work with, we have reverted to once a year performance awards. They are kept secret and given based on a very subjective supervisory rating. Motivational for about 30 minutes and becomes an entitlement quickly. In other words, no performance award – decreased morale. See the book “Punished by Awards” for a treatise on this subject.

I’m a fan of more frequent, earned awards (cash or not doesn’t matter) that come from either peers or customers. These are often more memorable, meaningful, and motivational. There are lots of variations that will work – On-The-Spot Cash, Special Act Awards, Time-Off Awards, Non-Monetary, etc. You can still limit the total to 1% of annual salary, but get a lot more motivational mileage!

Josh Nankivel

I hear you Perry. I don’t think the research excludes monetary compensation in addition to the other things that really motivate people. The primary lesson is that monetary rewards are not enough. Make sure your people are paid well, for sure. But don’t expect exclusively monetary bonuses to do much to motivate them.

Josh Nankivel

Thanks for sharing your insight Terrence. From my perspective, on and individual basis I find that immediate feedback (of which 80% is positive, if you are paying attention) works well. For monetary rewards, I think perhaps team and organizational goals being achieved may actually result in a good incentive that works. I haven’t seen research yet on team monetary incentives, but I’d wager they would work much, much better than individual monetary incentives for producing positive business results.

Andrew Krzmarzick

Love Dan Pink! And thanks for the “Office Hours” podcast tip, Terry.

I think monetary rewards are seen as a baseline – almost expected by knowledge workers. And they get it and shrug….but if you don’t give one, it’s a huge demotivator. It’s almost like you have to give it just to maintain status quo.

So Pink is on to something – what really motivates people is the chance to do something meaningful and where they feel a sense of autonomy and ownership. And they’d do that without pay (but we pay them anyway…and we give monetary incentives as a metric of career growth and gratitude).

Sarah Trujillo

Thanks for sharing! I really enjoy RSA videos and their topics. I agree that monetary incentives are overused and can become demotivators. Also, it is even more important for supervisors to engage their employees and ask them, “What would you appreciate as an award/compensation for going above and beyond?” For some, more telework days or a time off award would be more rewarding than a monetary incentive. I definitely agree with moving away from monetary incentives to purpose driven goals especially working in the public sector where we are not profit driven. Purpose driven incentives are even more important in the public sector. Additionally, as mentioned in another post, I have seen many awards given subjectively or based on favoritism or in tough economic times (like we currently face), I have seen it work negatively for performance because what was an incentive is no longer available (no money) for the same level of performance. What does that communicate to the employee?

Cameo Smoot

Excellent Post. Monetary awards create an “us and them” mentality among those who get the bonus and those who do not. This makes it very hard to get team work going when a work group is composed of both the haves and have not’s. I have been a team leader for many years in government and I have heard the complaints from the have not’s many times. To make things worst – when morale gets low among the have not’s, the management gives out “fluff” awards (not monetary) to make the have not’s feel better. This tactic only seems to work until the next rounds of bonus are granted. Fortunately, most bonuses for regular federal workers are a thing of the past.

Andre Natta

I’d have to agree with Andrew about monetary rewards being a baseline. They help enable the worker to do things they may not be able to otherwise, including get more training on personal time to improve their skills. The part I don’t like is receiving that reward without quite understanding exactly what makes it different from my normal work output. Sometimes that monetary reward could be given in the form of allowing that employee to grow professionally (e.g., covering the cost of a conference, etc.) if it’s not something normally done by the company. That can go a long way to boosting morale and building loyalty.

Nancy Heltman

I saw Daniel Pink at a conference I attended last fall and downloaded his book to my Kindle while he was speaking. I highly recommend it for managers who want new strategies for motivating staff. Actually if you think you don’t need new strategies you REALLY need to read it.

Bob Ragsdale

@Andrew Krzmarzick, thanks for pointing me to this thread.

This video and Dan Pink’s book Drive have really helped me solidify a lot of my own thoughts on how to work with and motivate teams.

At the beginning of this year I sat down with each of my teams and discussed the concepts of Autonomy and Accountability. I offered to dramatically expand the autonomy of each team with respect to how they approached their work, when they worked and the goals they worked towards as long as they matched their expansion of self-directedness (is that a word?) with an equal measure of accountability (reporting to me what they are progressing towards, how they are approaching it, when they expect to complete it, and how they are working as a team).

These teams were already working well but this change has spurred them to further step up their game. They are more satisfied in their work, the product they are delivering is better, and the oversight required by me has gone down. Thus far it has been a positive experience on all fronts.

Deb Green

@Robert Bacal – Just because someone may not have the right “background” doesn’t mean they don’t have insights that are valuable.

To your point, you *are* an individual. And your management/supervisor should have the wherewithall to be able to treat you as such, including rewarding with things that are useful and valuable to you. And just like pants – one size does not fit all. Tailoring will find what suits you and makes you feel best in clothing – rewards and benefits can have the best effect if it’s meaningful and creates value for the individual.

Maybe it’s a parking pass and not a yearly bonus. Who knows best? – – the individual and the manager, if they’ve had those kinds of conversations.

Josh Nankivel

@Cameo I agree, although I don’t think the research used by Pink in this context says anything about monetary incentives tied to team performance goals. Depending on what the research says about that, it may address the point you bring up about inter-team strife.

Josh Nankivel

@Andre Excellent point – and I think this research really only addresses direct monetary compensation – so having training dollars may be entirely different on the performance ouput.

Josh Nankivel

@Robert I consider myself a practitioner of scientific skepticism, so I very much appreciate your input here. I haven’t looked at the studies Pink sourced for this recently, but I did review them when the book Drive originally came out. They appeared to be well conducted, and there were related studies that found the same thing in North America and Europe if I remember correctly.

Is there anything in particular with Pink’s book Drive where you found his conclusions to not be supported by (well done) research?

Josh Nankivel

@Deb, yes I agree and if you shift the reward from direct monetary compensation to something else like vacation time, a parking pass, etc. then I think you’d need a different set of studies to support that with the social sciences. The primary variable in that case has shifted enough to make conclusions from the studies Pink is using invalid.

Gary M. Morin

While I wouldn’t expect audio-descriptions, to make this video accessible to persons who are blind, not that it’s really all that difficult, captioning should go without saying.