Why Rewards Matter in Employee Performance Programs

Why Rewards Matter - Rewards That Produce Results

$50 is $50 is $50. regardless of whether it comes in the form of cash, gift card or sunglasses...right? Wrong. The kind of reward someone receives makes an impact on their behaviour, and different kinds of rewards produce different kinds of results.

Based on science

Efficacy is the ability of something to produce a desired result. It relates to effectiveness.

On the left, the cash end of the continuum is quantitative and financial in nature. It puts people into a calculative mode and the reward leads to the question, "Is this a good deal?" That is, does the amount of cash equal the amount of effort I put in? This makes it less effective as a motivator because it removes most of the emotion out of the reward process. As soon as the reward changes into a cost-benefit analysis. you've lost your audience.

However, on the right end of the continuum are luxury goods and travel experiences. These prompt an emotional question of, “Do I want it?” When answering that question. you start to think of how soon you would use it, who you'd take with you or what colour to choose – all of which engage the imagination and a completely different side of the brain than the cash question.

The farther away from the dollar sign. the more effective the rewards become at changing behaviour. That is not to say that cash doesn't work; it's just that it is the least effective motivator unless you spend a lot of it.
Intrinsic and extrinsic motivation

In Dan Pink's book, Drive, he focused on the importance of intrinsic motivation. Intrinsic motivations are those things that motivate us from inside ourselves. You don't need a reward to get something done because you would get it done anyway. Unfortunately, in the workplace some people have it and some people don't. It's also incredibly subjective: it varies wildly from Person to person and is more difficult to address and measure than extrinsic motivation.