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Financial incentives can boost motivation though 'sense of affinity'

Employee motivation illustration with keywords reward, appreciation, skills, education, achievement, responsibility, promotion and empowerment

It's always nice to receive a financial reward at work. But do bonuses actually motivate staff to perform well -- and if so, how?

New research suggests that employees may be more motivated to work after receiving a bonus because they want to reciprocate a feeling of good will.

The study, published in the Journal of Management, found that individuals who received a financial reward for their performance in incentivised tasks temporarily put more effort into other tasks without a comparable incentive.

This is due to factors including workers feeling a sense of affinity with the organisation and wanting to "give something back", even if such tasks do not bring them immediate returns, the researchers said.

The findings add to previous research which found that employees' performance level is greater when working under incentive plans as opposed to working for their base salary.

However, prior theory suggested that incentives such as piece-rate or commission plans motivate good performance because employees anticipate that their current performance will generate rewards in the future.

"This research shows that after payment, employees temporarily seem to put more effort into unincentivised tasks," said study co-author Dr Hans Frankort, reader in Strategy at Bayes Business School. "This may be because they not only anticipate future incentive payments but because they are responding positively having received the payment.

"The employee responses to periodic incentive payments explain about 2% of total turnover, which is a lot for a behavioural effect."

Dr Frankort added: "The research is also counter to previous studies that suggest that because employees know in advance how much their effort will be worth under transparent systems, the reward they receive should not be a surprise and therefore should not result in a temporary increase in performance."

By highlighting how employee performance fluctuates in response to incentive payments, this research can help employers to develop a more consistent level of motivation in their workforce.

For instance, alternative motivators, such as informal feedback or commitment-building activities, could be offered in periods when incentive payments are not available.

In September, a survey by jobs and careers site revealed that one in four UK workers (25%) were considering leaving their current role within the next 12 months, with pay among the top reasons.

"I don't enjoy my current job" was the number one reason (30%) why workers were looking for a new job, followed by the desire for an increased salary (29%) and dislike of their current workplace culture (19%).

For employers keen to retain staff, a salary increase (50%), flexible hours (24%) and more perks and benefits (24%) were the factors most likely to make workers stay.

Posted by Fidelius on October 31st 2022

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