Many business owners think that getting peak performance from employees is simple—just tie cash rewards to goals. This technique is a mistake. One size doesn’t fit all, as every human being is at a different stage of their life and will be motivated by different rewards and recognition. The biggest challenge in creating the right initiatives can be the human resource department, which may suggest this kind of scheme simply to match its KPIs.
Here are some reasons why monetary rewards are not the answer for inspiring motivation:
1. They’re shortsighted. A reward may give a short-term boost in productivity to achieve the desired target, but employees may tend to overlook their other responsibilities (and the reason they are getting paid in the first place). A recent paper by the Incentive Research Foundation notes that “There is growing academic evidence that investments in non-cash rewards can elicit equal levels of performance for less cost than cash.”
2. Intrinsic rewards are vital. The provision of extrinsic-only rewards can never be a top motivator. A perfect mix of both intrinsic and financial can make the employee incentive system more effective. It’s important to pay consideration to how employees respond to intrinsic factors such as a sense of accomplishment and the feeling associated after succeeding a challenging task. Even
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