What is the key to a productive team? Everyone has their theories, but the research suggests high levels of loyalty, job satisfaction, and engagement among employees lead to the highest levels of productivity.
The problem is understanding how to elicit these feelings in your employees, especially when there are thousands in the workforce. It’s often more difficult to give each one individual TLC. This is why many large businesses offer monetary incentives. They think the chance of a juicy reward might drive employees to work harder and exceed targets. But that might not be the case.
Do rewards equal productivity?
The Massachusetts Institute of Technology (MIT) produced research which called the effectiveness of monetary rewards into question. In the study, they tested students at MIT to see if they would increase their performance if offered monetary incentives. They asked the students to do a series of tasks like memorising strings of numbers, or physical tasks like throwing a ball through a hoop. They rewarded each student with one of three monetary rewards: small, medium, or large. This depended on their performance.
As long as the tasks were strictly mechanical, monetary incentives worked great as a motivational tool. If they offered students more money, they would perform better. But one of the biggest shocks was that once the task involved even basic cognitive skills, a larger reward led to worse performance.
These were not the results the researchers were expecting. They thought it could be because MIT is one of the most prestigious schools in America. The students there are typically relatively wealthy. Perhaps the stakes weren’t high enough for them.
The researchers repeated the experiment in rural India and offered the following rewards:
- Small – Two weeks’ salary
- Medium – One months’ salary
- High – Two months’ salary
The researchers discovered those who were offered the small and medium reward performed at around the same level. Those offered the highest reward did significantly worse, backing up the findings of the first study.
What does this tell us about productivity?
These studies show money is not a good motivator for employees. In fact, it can lead to worse performance. So what does motivate people?
Money is important, but not in the way most businesses think. You should pay staff enough money to take it off the table completely. Instead of your employees worrying about money, you want them to forget about it and focus on their job. After this, there are three factors that lead to better performance and personal satisfaction:
- Autonomy – Let employees find their own answers and make their own decisions. The studies showed employees with autonomy used their time creatively to benefit their employers.
- Mastery – People have an urge to get better at things and are motivated by challenge and mastery, which is great for boosting a stronger workforce.
- Purpose – When the profit motive is separated from the purpose motive, you risk producing bad products, awful places to work, and ethical mishaps. Purpose gives people a reason to produce better work because humans are purpose maximisers, not just profit maximisers.
How can you do this in your business
If you want higher productivity, you must use the right tools to give people autonomy, help them master their roles, and give them purpose. This starts with your company’s technology. Consider using data to understand where productivity is lacking in your business. And aim to remove the obstacles to productivity like time-consuming communication tools and a lack of streamlined organisation. This will ensure your new productivity strategies go further.
The goal is to treat people like people at work. They’re not slow and small, rather they’re filled with enormous potential and you can only tap into this by letting them focus on what motivates them, not the money.
Inform People helps businesses tap into their workforce’s potential by giving them the tools to make being more productive easy. We boost communication, help you organise training and meetings in a few clicks, and keep you compliant from one simple interface. Visit our website to find out more.