Motivating People With Better Rewards

Kudo Box and Kudo Cards

Motivating people with better rewards

Anything that has real and lasting value is always a gift from within. — Franz Kafka

Rewards are among the trickiest and least understood tools in management.

Paying for results can actually make people perform badly, and that the more you pay, the worse they perform. A common assumption among managers is that nothing works like money when you want to make people work harder, longer, or more effectively.

Scientific research has revealed that incentives for performance actually work the other way around. The anticipation of a reward (either money or something else) works counterproductively, since it kills people’s intrinsic motivation. The incentives ensure that people stop doing things just for the joy of the work. It is called the over-justification effect. Instead of expecting and feeling enjoyment, people expect a reward.

Another problem is that rewards based on outcomes increase the risk of cheating, since people’s focus is on getting a reward instead of doing a good job. When you reward employees based on outcome, they will take the shortest path to that outcome.

Fortunately, there is some good news as well. Rewards that trigger intrinsic motivation are more effective, more sustainable, and usually cost less money. Intrinsic motivation is defined as behaviour that is triggered from within a person. In other words, the people are rewarding themselves.

These six rules for rewards give you the best chance at increasing people’s performance and their enjoyment of work, while encouraging intrinsic motivation instead of destroying it. Notice that an incidental compliment addressed to a colleague in a meeting for a job well done satisfies almost all six criteria.

Don’t promise rewards in advance. Give rewards at unexpected times so that people don’t change their intentions and focus on the reward.
Keep anticipated rewards small. Big rewards are likely to decrease performance. But with small rewards, the risk of hurting performance is negligible.
Reward continuously, not once. Every day can be a day to celebrate something. Every day is an opportunity for a reward.
Reward publicly, not privately. Everyone should understand what is being rewarded and why. The goal of giving rewards is to acknowledge good practices and have people enjoy the work, too. To achieve this, a regular public reminder works better than a private one.
Reward behaviour, not outcome. Outcomes can often be achieved through shortcuts, while behaviour is about hard work and effort. When you focus on good behaviour, people learn how to behave. When you focus on desired outcomes, people may learn how to cheat.
Reward peers, not sub-ordinates. Rewards should not come just from the manager. Create an environment in which people reward each other because peers often know better than managers which of their colleagues deserve a compliment.

A public system that enables people to give each other small, unexpected tokens of appreciation for doing a good job meets all six basic principles of good rewards. A gift attached to the compliment is of course optional. It is the intention that counts. However, experience suggests that a tangible gift helps a compliment to have a bigger impact on the receiver. The gift enables the person to touch, hold, and cherish the compliment. And that has value, too.

Kudos could be implemented as an e-mail to a central mailbox, or by slipping a note into a cardboard box. There are many other names in use for the same system.

What if two people abuse the kudo box system to get free movie tickets? What if you see such risks because you have a low level of trust in others? What if this low level of trust is a result of your company’s culture? What if the kudo box is exactly the kind of practice that is needed to change this culture of distrust in a relatively harmless way?

Shouldn’t we reward teams instead of individuals? Well, yes, of course. But teamwork can only emerge as an outcome of people’s individual contributions to that team. You could give a reward because of what an individual did for the whole team. Quite often, however, people’s individual contributions to the whole have to be recognized first, before the whole unit performs in a way that deserves praise as well.