Is cash still king when it comes to motivating modern workforces?

Need to know:

  • Assuming that an employee is fairly paid and has adequate income to fund their lifestyle, a pay rise or bonus is unlikely to make a significant impact on their performance.
  • A good long-term strategy for boosting employee productivity as opposed to cash incentives is clear communication and strong management.
  • Employees want to feel accountable, responsible and trusted to do the job they are employed to do, with some of the biggest demotivators from employers being undermining staff or micromanaging them.

After more than a year of the Covid-19 (Coronavirus) pandemic, many employees may have struggled to find their motivation when it comes to their job. Cash incentives, such as pay rises and bonuses, have long been a staple, but has this continued through the difficulties of the past year, or is there another factor that might improve motivation and productivity levels?

Is a pay rise or bonus enough?

Gautam Saghal, CEO of employee experience platform Perkbox, believes that cash incentives can bring joy, reward and security, but the problem is that the effects are transient, as it seems that the less appreciated employees feel at work, the more money they want in order to do it. “Many traditional incentives schemes are related to cash in the form of bonuses and stock and share options, yet there are myriad studies which show how these are actually no better at motivating staff than three of the highest-rated non-financial rewards: praise and recognition, validation from leaders and a sense of ownership and autonomy,” he says.

A good long-term strategy for boosting employee productivity as opposed to cash incentives is clear communication and strong management, as this can lead to a more motivated team. Cash incentives may work for motivating employees but only for short bursts, says Iain Thomson, director of incentive at Sodexo Engage. Eventually this can become less effective the more it is expected and repeated. “There are other ways of motivating and encouraging employees beyond cash bonuses. Businesses can implement a peer-to-peer recognition platform, which enables employees to publicly celebrate the accomplishments of colleagues. This recognition is key to making team members feel valued, as putting in the hours and the effort for it to go unnoticed can be demoralising. Managers can also be a little creative with rewards, of course cash is never sniffed at, but e-vouchers or discounts can be more personal and impactful,” he says.

Chris Wakely, executive vice president at Benify, agrees that a cash incentive is useful but it has to be done in the right way: if an employee is not engaged it will not work on its own.

For employees to feel engaged and motivated to give their best at work, organisations need to address employees’ individual growth needs. Helen Payne, principal strategic benefits consultant at Aon, says that when speaking to clients about what motivates employees, she regularly refers back to Maslow’s hierarchy of needs, which suggest that pay is the foundation because without it employees cannot afford their basic physiological needs of food, warmth and shelter.

“Assuming that an employee is fairly paid and has adequate income to fund their lifestyle, a pay rise or bonus is unlikely to make a significant impact on their performance,” she says. “Three things are key: autonomy, the freedom to choose how, where and when you work, mastery, the desire to be really good at something you enjoy, and purpose, the belief that you are making a positive impact in the wider world.” This can result in greater productivity and a stronger reputation that shows an organisation does not just focus purely on pay.

Employee recognition

Wherever an employee works, a good day can be determined by three things: a sense of worth with the job at hand, recognition from peers for efforts, and feeling a sense of achievement for the work put in.

Saghal says that employees want incentives and benefits that enable their pay packet to go further, and cover emotional and physical wellbeing. “From cheaper car servicing and MOTs, to more flexible payment options for big ticket purchases: employers can respond to this by ensuring that what they offer promotes financial literacy and management, flexibility and variety so that it is relevant to everyone. Free subscriptions to meditation apps, access to 24/7 counselling will complement subsidised gym memberships or access to interactive online resources that promote emotional and physical wellness,” he adds.

When looking at what drives engagement, motivation and recognition across a variety of different organisations, several aspects frequently come up such as feeling inspired by the values and goals of the business, feeling involved, empowered and able to speak up, and being able to having real opportunities to grow and develop in a career.

Thomson says that employees want to feel accountable, responsible and trusted to do the job they are employed to do, with some of the biggest demotivators from employers being undermining staff or micromanaging them. “Employees are more likely to feel motivated if they work in [an organisation] that consciously tries to create a positive culture. Business leaders should prioritise fostering an enjoyable working ambiance, which can be done with strong management and clear communication, but also through investing in competitive benefits and learning and development,” he says.

The pandemic’s impact on motivation

Employers have found that leadership behaviours and organisational culture can have a huge effect on employee engagement and motivation, especially so since the beginning of the pandemic. But they have risen to the challenges that the pandemic created to build on the trust that they have formed with employees over the years, and to demonstrate care and compassion, says Yves Duhaldeborde, senior director at Willis Towers Watson. “Moreover, in parallel to the pandemic, the ways leaders have begun to address the two profound societal challenges of diversity, equity and inclusion, and climate change and sustainability, have also influenced levels of employee engagement. Leadership and voice have therefore taken an even more dominant position as engagement drivers over the past 15 months, but of course this is likely to get rebalanced in the second half of the year with people’s rising concern for their own growth and development,” he says.

Perhaps one impact of Coronavirus on motivation is that it has changed the way in which employees work and encouraged the ascent of the hybrid working model, as what staff seek out in a working environment has permanently changed.

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“The pandemic has initiated a new era of working and employees now know that a more flexible working model can be beneficial to business rather than damaging,” says Thomson. “The impact of a year of upheaval on an existential level also means many are valuing purpose more when looking for a job, which means an employer that will nurture personal development rather than adopting a transactional approach to work will be more likely to attract and retain talent.”

Despite how times have changed in terms of cash still being king for employee recognition and the impact Coronavirus has had on motivation, having a sense of purpose and pride in the work employees do remains essential to this day.