A study by The Harvard Business Review examined how incentive pay affects employee well-being, job satisfaction, organizational commitment and more. By interviewing senior managers at companies across the U.K. and gathering data from employees at these companies, the study found that profit-related pay, where employee compensation is related to the profits of the company, did not have positive effects. To the contrary, some employees felt less committed to the company and their work. That’s because organization-wide incentives such as profit-related pay can often depend on an employee’s status in a company and are not equitably distributed.
Money doesn’t motivate people outside the office either. A recent report by Case Western Reserve University studied how often new gym members regularly visited the gym, even when they were given monetary incentives. At the beginning of the study, it was the intention of new members to go to the gym three times a week, but most ended up going an average of 1.5 times per week.
In the six-week study, participants who visited the gym nine times — approximately 1.5 times per week — were promised a reward, which would be either an Amazon gift card or an item such as a blender or an item of equal value. At the onset of the study, each participant was told their specific reward. The researchers created a control group, where participants received $30 Amazon gift cards regardless of how often they went to the gym throughout the six weeks.
It turns out, even when people were paid to exercise, they still weren’t motivated to hop on the treadmill. In fact, those promised the $60 gift card did not visit the gym much more than those who were simply handed the $30 gift cards (regardless of whether they went to the gym). It wasn’t until the final week of the study, when people had their last chance to win a prize, that gym visits increased ever so slightly by a low 0.14 more visits per week.
So how can you motivate your employees? Rather than using pay, more effective ways to motivate employees are providing constructive feedback, fostering a collaborative work environment and connecting with employees to show you care.