However, there has been plenty of scientific evidence for at least 20 years that has shown that this is not the case, according to Daniel H. Pink the author of five books about business, work, and behaviour. (Washington).
The prolific contributor of articles on business and technology to publications, including the New York Times, Harvard Business Review, Fast Company, Wired, and The Sunday Telegraph, explains his argument in a popular TED talk.
Numerous tests over the years have shown that actually offering a money “prize” to groups who solve a defined problem more quickly than others is counter-productive and actually slows them down.
However, problem solving actually speeds up if there are no constraints and people are left free to think laterally.
Pink illustrates how this has been used to productive effect by a US software company that allowed employees to spend almost 50% of their time on anything they wanted, but they had to then present the outcomes to the rest of the company. Another example he cites is Google, which operates a system where engineers are free to spend 20% of their time working on anything they want. The results have accounted for up to 50% of Google’s new products.
Employee loyalty is about respect and recognition
While financial incentives might work for a clear set of simple, routine tasks with clearly defined objectives, the majority of business growth in the 21stCentury relies on innovation and conceptual ability. While obviously paying people adequately and fairly is important, what matters in the latter context is to give employees self-determination and control over their work.
It plays into their desire to do better, to use their imagination and to feel trusted. The “reward” in this context may be the respect and recognition from management and from their peers.
Rewards or recognition do not need to be explicitly stated at the outset, but loyalty depends on being listened to, consulted, respected and recognised. The mechanisms can range from suggestion boxes to a post on a noticeboard for a particular achievement but the essential ingredient is acknowledging that people are responsible, able and adult and can be trusted to do their best without over-controlling management. Suggestions that are not acknowledged discredit management, and suggestions that are ignored or rejected without consideration make people feel undermined.
Get it right and a business will be able to rely on its employees’ loyalty, get it wrong and your staff will know you don’t really care about them.