Employees Care More About Awards When The Company Lets Others Know That They Lost

Using salary and bonuses alone is both limiting and expensive, it doesn't account for how much recognition and praise motivates employees.

The key, according to a recent study, isn't just in giving people some cash, but making the award very public, and thus letting everyone know that they lost out.

In a detailed survey and study of workers at an IBM research lab published by the Journal of Socio-Economics, behavioral economists Susanne Neckermann and Bruno Frey found that naming an award's recipients and holding a public ceremony matters has much of an affect in motivating people as increasing the cash value of a reward from $0 to $1000.

The study worked by setting a number of scenarios, or "vignettes" in front of employees which differentiated awards based on the value, type (cash or gift), level of publicity, and the number of recipients.

It wasn't that money doesn't matter at all, it does. More money means more motivation too. If there's no or very little cost to the employer, it makes the award seem meaningless, like a trick or manipulation to boost performance on the cheap rather than an actual acknowledgment of good service. Also, even though a gift might show more thought, people really do prefer cash.

The number of recipients has two contradicting effects. More recipients reduces scarcity value, but increases the chances of winning.

Posting somebody's name, or a list of names to a company's internal site and announcing their win at an already existing company event costs almost nothing. But it means a great deal to people.

It might be considered bad form to tell somebody how much your bonus was, so the congratulations of coworkers who see you win the award serve a very different function.

Beyond seeming insincere, the principal worry for employees is that employees who don't win, which will be a majority if the award is to mean anything, will lose motivation or grow bitter after not winning. They do find that effect to a certain degree, and it's difficult to tell whether the positive effects outweigh the negative ones. It depends on the exact design of the reward.

Still, the desire of people to be publicly recognized is a valuable lever that companies don't use often enough.

Find the full paper here