Money is the most commonly used form of reward in organizations. It is common for managers to award bonuses in addition to the employees’ regular wages or salaries, usually to honour their recent performances. Yet, the effectiveness of such compensations in motivating the employees is still debated.
Different theories attempt to analyze how money effects motivation. For example, Theory X assumes that employees dislike work and need extrinsic motivation. Bonuses could serve as the extrinsic motivation, and increase the productivity of workers. On the other hand, some theories infer that bonuses may not be effective. The Motivation-Hygiene theory shows that the hygiene factors must be met in order to avoid dissatisfaction. If there was an employee whose hygiene factors were not yet being met with their set wage of salary, bonuses could alleviate some of the hardship and prevent dissatisfaction. Yet, as the theory states, it is unlikely for the bonus to serve as motivation factors, as factors of growth and achievement cannot be accomplished simply by an extra paycheck.
Some studies show that bonuses can even decrease the level of motivation. Dr. Maurayama, a psychology associate professor, argues that bonuses can decrease motivation by making employees feel that their autonomy is being threatened. His research shows that job satisfaction was the most important factor in motivation, which bonuses actually threatened.
My personal experiences further showed the limitations of bonuses. Currently, I work a part time job as a debate coach, and I have received a year-end bonus at the end of last year. The extra pay was nice, as it helped me in some of my Christmas shopping, but the surge of extra motivation was soon gone. Rather, I was more motivated by other factors, such as job flexibility. In my second semester of teaching, I got to choose which classes and time slots I would work, which made me more satisfied with my job and the treatment I was given. I could work on days that I was less tired, which, I feel, also improved the quality of my teaching and benefited the organization overall.
Yet, there are ways in which managers can make their bonuses more effective. Dr. Seidel, an associate professor at Sauder School of Business, recommends that managers must be very clear about why the employee was receiving that bonus in the first place. Employees must understand what they must exactly do to receive the reward, which would also prevent competition and resentment among the employees. Still, Dr. Seidel recommends other forms of rewards, such as stock options for employees. While bonuses only affect employees in the short term, owing stocks mean that the employee’s financial well-being is more closely tied to the well-being of the organization, which would lead them more encouraged to work in the long term.
References:
Spencer, Julie. “Cash Bonuses Don’t Increase Workplace Motivation, Claim Experts.”Getreading. Trinity Mirror Southern, 17 Jan. 2017. Web. 26 Feb. 2017.
Tchir, Jason. “Why Bonuses Aren’t Always the Best Way to Motivate Your Employees.” The Globe and Mail. The Globe and Mail, 21 Dec. 2016. Web. 26 Feb. 2017.
Langton, Nancy, Stephen P. Robbins, and Timothy A. Judge. Organizational Behaviour: Concepts, Controversies, Applications. 7th ed. N.p.: Pearson Education Canada, 2016. Print.