Of course yes! You pay your
employees to do the work and to do it well. You also give rewards when the work
has been done perfectly. It means that money is a way to motivate people. But does
that mean that you can continuously motivate people with money? Or worst, does
that mean that you maybe pay too much your employees? A recent article in the
HBR made me think again about this question.
In this article, Ray Fisman _ The Org : The Underlying Logic of the Office_
deals with an experiment that did some searchers in Germany and Switzerland. He
says that the study is “suggesting
that economists' focus on cash might often be misplaced”.
The study was very simple:
a work for which it’s easy to measure productivity and for which no specific
skills are required. They chose "cataloguers in the library". Students were paid
12 euros an hour. They created three groups of students:
-
Group 1 :
12 euros/hour + 7 euros of bonus if they do 3 hours
-
Group 2 :
12 euros/hour and instead of cash, they offer a bottle of water
-
Group 3 :
baseline, just paid 12euros/hour
Check the results on this
graph:
Productivity can be increased not only with money but also with gifts. And we can understand that if we think
about the margin utility. The labor supply curve slope upwards to the right as
it does between the point A and B for example. The margin utility is increasing
because for each more hours worked, the employee increases his wage _ money used
to enjoy the time he doesn’t work. This will continue until one point (M like
Maximum). Beyond this point, he will start to reduce the amount of labor hours he
supplies even if the wage is still increasing (point C).
At one point, the company is
losing money and productivity at the same time! How can you still motivate your
employees to increase their productivity?
There are many books about it
and many specialists who work for companies as consultants to motivate people. I will just
give some categories of reward/gifts that you can give to your employees to increase their motivation:
- - Recognition: A person needs to be part of something. Just some time with
croissants in the morning for example or some flowers or whatever on the desk
for special occasions
- - Responsibilities and Power: Some searchers argue that you can give more power and responsibilities to
someone. Even if on the long-term he will ask for more money…
- - Training : it
means that you are taking care about the future of your employee and you want
to see him evolving in the company
- - Gadjets : it
can be a cell-phone, a car, an house cleaner, etc…
But you can do with less
money. I know a manager who worked very hard with his team to finish a project.
Everyone worked during the weekends and until really late in the evening. The
problem: the company did not have any more money to give as reward, or maybe
20 Euros per person. Ridiculous. So, he decided to organize a visit in a beautiful
castle around Paris. He managed to do it for free and took all his team to the
castle with an Art History’s professor who did the visit. Results: the loved it and were reallu gratefull.
To conclude, every company
should ask themselves if they pay correctly their employees. By “correctly” I
mean: Are our employee motivate to work for us?
If not, ask if a wage-increase is the solution. If it’s already higher
than the market, try to motivate them using other levers.
PS : Check this very famous video about motivation. More that intersting, it's also very funny and very well done :
