Did you get up on this (hopefully) beautiful Monday morning thinking about the money you will make this week? While some go to a job they love doing, others do it mostly for the money. Even for those who love their job, being paid probably plays at least a small role in why they keep going to work day after day. After all, we have bills to pay, we have to pay the rent or the mortgage, and we need to put food on the table. But how much of a role does money play in how you perform at work?
Someone close to me recently got quite a nice yearly bonus for doing work that “exceeds expectations”. He was quite pleased about it and appreciated the recognition, but when I asked him if getting this yearly bonus changes how he does his work, he said “not at all”. He is just conscientious and tries his very best to attain the best outcomes for both his clients and the company he works for, and when he does, he feels good about it. He says as long as he gets paid well and fairly, not necessarily contingent on meeting very specific targets, he’ll do the best work he can do.
This testimonial fits quite well with results my colleagues from Norway and I got when looking at what happened after the introduction of a bonus system in an Norwegian insurance company. In this study, we surveyed over 600 sales employees over a two-year period to see how the introduction of quarterly and yearly bonuses based on selling insurance (we’re talking of an average of $20K/year in bonuses with no decrease in base pay!) changed their motivation, their work efforts, and their desire to continue to work in the company. We found some surprising things.
First, employees did not feel that they had a lot of influence over their sales performance, so did not feel they could influence how much of a bonus they would get. Selling insurance is not just a matter of effort and skill, but also a matter of being in the right place in the right time. Second, the bigger the bonus, the more employees became extrinsically (money) motivated, while meaning and enjoyment for the work decreased. They did report putting a bit more effort because of the bonus, but not a whole lot more. However, the bigger the bonus, the more they wanted to leave!
Did they want to leave because they now thought they were a “hot item” and could get better jobs? Or was it the decrease in meaning and enjoyment that drove them out? Or the stress it created because of they didn’t feel in control of it? We don’t have information about whether they thought they could get something better elsewhere or if they felt more stressed. We do know that the decrease in meaning had an influence on them wanting to leave.
What’s more, the company reported increases in unwanted behaviors, such as stealing clients from colleagues and keeping customers warm to boost quarterly bonuses. The company had to introduce monitoring and policies it didn’t need before. And the icing on the cake is that the company did not experience an overall increase in sales. Those who sold more prior to the plan sold the same after, but now they were getting a bonus for it.
One thing for sure, we saw employee motivation shifting from being meaning and enjoyment based to being money based. And we know motivation based on meaning and enjoyment are related to better performance and well-being at work. So before overhauling a compensation system, it’s very important to think about how it will affect the quality of employee motivation.
What have your experiences with bonus systems been like?
This post was co-authored with Courtenay McGill.