Your Most Powerful Employee Motivator, Hint: It’s not green

By Adrian Gostick and Chester Elton

    For the past decade we have been studying employee engagement. We wanted to know why some people work so hard and smart and others, well, don’t. We’ve surveyed more than half a million employees in big companies and small. And after all this research? What we have found about motivation and effective management is actually quite remarkable.
    The first learning is about a Carrot. Employee recognition—appreciating the great work of your team members—tops the list of things employees say they want most from small business owners. Simply put, when employees know their strengths and potential will be praised and recognized, they are significantly more apt to produce value.
Yet some will ask, “Isn’t money the most effective carrot? Aren’t the allure of bonuses and increases in salary what really motivate our employees?”
    To begin with, the fact is that money is not as powerful a reward as many people think. While compensation must be competitive to attract and retain talented employees, one third of the people you give a cash award will use that money to pay bills. Another one in five won’t have any clue in a few months where they spent the money or even how much they received. Just ask yourself, did you save the bank deposit slip from the last time someone gave you a $100 cash bonus? Is it tucked away in a scrapbook of memories? Of course not. But what about something useful and tangible that was given to you as a reward? Not a t-shirt, sleeve of golf balls, or canvas tote bag, but something useable and valuable. Chances are, even years later, you still own it and can picture the award in your mind.
    However, the more prevalent problem with cash is that you don’t have a lot of it to give, and your people know it. If an employee is doing a fantastic job, you might be able to get them a five percent raise at the end of the year. Not much motivation there. As for large bonuses tied to personal performance, they are typically reserved for business owners and a few key managers. Lower-level employees and professional staff typically are out of the bonus pool or receive a very small bonus amount. Not a lot of motivation to excel there. Benefits, too, are locked in. As a manager, you can hardly offer an excellent employee a better dental plan.
    The happy surprises of pay and benefits that a motivated employee hopes for are frequently beyond your control to provide. The reality is most workers are locked into a routine of sameness—paycheck to paycheck. So it’s time to learn what you do control: The Carrot supply.
    “When people join us, they obviously have agreed on the pay,” one business owner told us. “What they are hoping for is a good environment where they can use their capabilities and talent to good advantage and then be recognized for it.”
    A recent survey of 3,000 people asked employees, “What do you really want from your job?” Employees ranked “Pay” number three on the list. Number one was “Career/Learning Development Opportunities.” Number two? “Recognition.” Interestingly, number four was a better “Relationship with my Manager.”
    And that leads us to a key finding of our global studies: one key characteristic of truly effective management—an element that shows up time and again in every great workplace—is a manager’s ability to recognize employees’ talents and contributions in a purposeful way. Our study results show that when recognition is considered effective, businesses have lower employee turnover, achieve enhanced business results, and are seen as stronger in other areas of leadership such as goal-setting, communication, trust and accountability.
    In other words, employee recognition accelerates a small business’ effectiveness.

Adrian Gostick and Chester Elton are the authors of the New York Times bestsellers The Carrot Principle and The Orange Revolution.

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