Cash Bonuses And Employee Motivation


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Would you be surprised to learn that not everyone is motivated by money? When it comes to offering employees an incentive for performance, cash might not always be the best reward. This document by Chris Burand gives you alterntaive motivational incentive ideas. 

A recent study asked 1,010 employees a series of questions about earning bonuses. One question was, 'How did you use your last cash bonus?' More than six in ten (62%) used it to pay bills, couldn’t remember (boy, I bet that bonus was really motivational!), or had not received a cash bonus. Another question asked how they’d like to spend a cash bonus. Some 63% wanted to spend the money on a trip or a personal shopping spree.

Many agency owners wonder why cash bonuses have so little effect on their employees, especially CSRs. This study and my own experience show why cash bonuses don’t work well.

I’ve surveyed hundreds of CSRs about cash rewards and the results are overwhelming. Cash rewards just aren’t that motivating. This is a very difficult concept for most agency owners (and me) to grasp. Salespeople are almost always highly motivated by cash rewards. But as the study showed, most people want choices. In my own surveys, most staff employees were most motivated by being given choices. The actual choices weren’t that important. The fact they were given a choice was much more important.

In my surveys, cash ranks fourth as a motivational reward. Gift certificates are among the most effective rewards. Many CSRs have explained that when given cash they feel obliged to put it in their family savings, but that they can spend a gift certificate on themselves without feeling guilty. The survey found that what people want to spend money on and what they need to spend it on are very different. To be motivational, rewards need to relate to something desirable and enjoyable.

In the survey only 41% of the respondents felt that cash bonuses motivated them for a year or more. In fact, 32% said the cash bonus had no positive effect. So, why pay it?

After gift certificates, extra vacation days are most important, followed by public recognition of the employee’s efforts as part of the team. As Bob Nelson, president of Nelson Motivation, Inc. said, 'It’s not cash, it’s not stock options, it’s not bonuses, and it’s not getting a window office with a view. Sincere appreciation from one’s manager is the thing that makes the biggest difference.'

These findings suggest that cash rewards aren’t as motivational as many agency owners might think. The key is recognizing that one size does not fit all and to give people a choice. Give people the opportunity to obtain a reward important to them because they just won’t be motivated by a reward that isn’t.

Chris Burand can be reached at Burand & Associates, LLC, PMB 345, Pueblo, CO 81003, (719) 485-3868, fax (719) 485-3895, e-mail[email protected], or Web site
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