The reason for the financial crash, the only way to get your staff working harder, a reason for staying in the job that you hate – bonuses are a lot of things to many people, but is it time for a fresh approach to motivate your workforce?

We certainly thought so, and despite having a seemingly healthy bonus system in place, we thought it was time to reevaluate. With a little research and application, the results were a definite eye opener. Here’s the lowdown on what we found out, and how it can help your business:

Science Says!

Always a good place to start, we tracked down some hard and fast numbers on the subject of staff bonuses.

In 2008, Massachusetts Institute of Technology (MIT) undertook one of the most comprehensive studies to gauge the effect of bonuses. The results of this study were a game changer, and still often quoted many years on.

Participants were asked to take on several mental and physical tasks, with varying bonuses put forward: small, medium or large.

One of the key findings was that there was a direct correlation between bonuses and output of mechanical tasks (i.e. factory packing), but almost zero impact on motivating participants on the creative tasks. Since creative tasks make up the bulk of our workforce’s day, we decided to rethink our bonus structure.

Putting it into Practice

How did the MIT findings apply in the real world? To find out, we applied changes to our team bonus structure. Well, more of an abolition of the bonus structure we currently had.

The first thing to mention would be that there was no revolt against the management!

The most important thing however, was that the output of our employees was more or less the same. Previously attainable targets were still being hit. Targets we traditionally struggled to hit, we were still struggling to hit, but no more than usual.

The Trouble with KPIs

What did these results tell us? That the problem did not lie with the staff and their application, rather with what KPIs were being set for them. They simply weren’t feasible.

A first hand example, is our abandoned call rate. Demand was too high, and we just didn’t have enough staff to deal with this. A staff bonus would not work in this scenario, we needed more staff.

An understaffed team, with an unobtainable target – a bonus to try and rectify this would actually demotivate the team: there was no chance of the target being hit, but they can still see the carrot which they’ll never reach.

No bonuses, but you can still reward

The majority of the workforce in any industry will take pride in doing a good job. Your employees will want to achieve the most they can, given their salary is a fair one. If your staff are not continuously worrying about their pay packet, they will focus on what they are being paid to do.

How to motivate your staff then? We have already ascertained that most staff want to excel in their role. A big part of this is job satisfaction. And a big part of job satisfaction is simply being appreciated for your efforts. Often overlooked, saying ‘thank you’, or ‘great work’ will go a long, long way. For most, being valued is incentive enough.