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Cash May Not Be The Only Way to Motivate Employees


employee accepts flowers from co-workers

Unanticipated rewards can lead to improved subsequent employee effort, the researchers found.

Credit: Getty Images

Tangible rewards motivate employees when they're easy to use, pleasurable, unexpected, and distinct from salary, according to a study published in the journal Accounting, Organizations, and Society.

A survey of firms in the United States found that 84 percent spent more than $90 billion annually on tangible employee rewards, such as gift cards, recreation trips, and merchandise in hopes of increasing productivity.

"We found that there is, at best, mixed evidence regarding the motivational efficacy of tangible rewards versus cash rewards," says Adam Presslee, an associate professor at the University of Waterloo. "It is somewhat puzzling why so many companies go to the trouble of tangible rewards when cash rewards also lead to motivational differences."

Managers interested in motivating employees using tangible rewards would be best served to offer rewards that incorporate four attributes, the researchers say: fungibility, hedonic nature, novelty, and discrete framing.

From University of Waterloo
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