Understanding the psychology of employee motivation

employee motivation




What makes people care about their work?


Money is what gets workers in the door, but it doesn’t make them go the extra mile. Indeed, many managers and CEOs get frustrated when they pump thousands of pounds into employee reward systems and don’t see any long-term impact on performance or productivity.


These managers tend to fall into the same trap. They think the problem of employee motivation can be solved by throwing more money at it. But it can’t. Human behaviour is much more complex than that. Financial incentives definitely influence employee motivation, but many other factors are also at play.


Speaking in Business Insider, Dan Ariely, professor of behavioural economics and psychology at Duke University, summarised this point nicely:


We have such specific rules about bonuses and money that the things we often don’t do well are compliments, creating a sense of ownership, and a sense of contribution. If we focused more on those things and worried less about the money, we would get people to be more motivated.


There are lots of cases in which we pay people for specific things and in doing that, decrease the overall good will and motivation toward the company. It’s true, when we pay people, we can see an immediate short-term increase in productivity. But what we don’t see is that it also creates a long term dissociation from the business where people are basically saying “Really!? This is it? That’s the reason I’m here? Not that interested.”


So if money doesn’t work in the long term, what does? To deliver results that last, employers need to understand what really drives employee motivation, human behaviour, and reinforcement. That’s what we’ll explore in this post.


Why employee motivation matters more than ever


According to the 1998 study, “Understanding Employee Motivation,” conducted by James R. Lindner at The Ohio State University Piketon Research and Extension Center, motivated employees are key to business survival. This is especially true in our current era of AI and automation, with so many disruptive changes on the horizon.


To be able to continually adapt to a rapidly-changing business landscape, employees must be motivated. Those who lack motivation are likely to prefer sticking with “the way they’ve always done things”. Furthermore, satisfied employees tend to be more productive which also helps organisations thrive.


To be effective motivators, managers need to understand what makes their employees tick, and what gets them going within the context of their role. In the conclusion of his paper, Lindner argues that of all the functions a manager performs, motivating employees is arguably the most complex. This is due to the fact there is no cookie-cutter formula to follow. Every individual employee is different, and so are the factors that motivate them.


So, what works?


While there may not be a magic formula for employee motivation, some approaches are definitely more effective than others. In an interview with Quartz magazine, Dan Ariely summarised four of the central messages from his book Payoff: The Hidden Logic That shapes Our Decisions.


Free Ebook Download: 17 Ways To Make Employee Rewards More Motivating 


Make work rewarding


People want to feel like they’re contributing. They want a sense of purpose, a sense that the work itself has impact. To do this Ariely recommends employers highlight how their products or services improve people’s lives.


Admittedly this is easier to do in some sectors than others. For example, it’s easy to see the benefits in producing drugs that fight cancer,  less so in making sugary soft drinks. But even then, employers can still emphasise things like the joy of the consumer, the sweetness of the drink, or even just the sound of a can opening.


Companies should give workers insight into its operations, and let them participate through company-wide meetings. This can be taken a step further by offering employees equity. Doing so encourages employees to invest in the success of the business. For example, Greggs bakers in the UK  run a profit share scheme whereby 10% of annual profits are distributed to employees. The amount each employee receives depends on how long they have been with the company, which helps with retention.


Trust people to do the right thing


Nothing drains employee motivation like bureaucracy.  Organisations have regulations and procedures to standardise operations. But as they reduce employee autonomy, they reinforce that idea the workers are replaceable cogs in a machine. At worst, an over-reliance on rules and procedures can harm the organisation, as workers find ways to game the system.


By loosening the regulations, corporations may see a minority of employees take advantage, but more will use their new-found freedom to serve the company’s goals in more creative ways. Ariely cited a large hotel company he worked with that relied on telemarketing. Its employees were instructed to read from a script to sell products, even if they knew that the scripts weren’t appropriate for customers. When employees were allowed to deviate from the script, they had happier customers and increased sales.


Give people work that challenges their ability


The more effort we put into our work, the more pride we take in it. In an experiment, Ariely asked subjects to build origami cranes and frogs by folding pieces of paper. When he asked the builders what they would pay for their creations,  they offered on average five times more than other potential buyers. And when he deliberately made their tasks harder by omitting key details from the origami instructions, the price offered by objective buyers went down, but the value their builders placed on them soared.


Through this Ariely demonstrated that people derive more meaning from work that is difficult than from jobs that are easy or rote. Employers should heed this by giving people new tasks or moving them into new roles that stretch them.


Think carefully about cash bonuses


Cash bonuses do deliver short-term boosts in performance, but they should be used sparingly. Ariely argues that this is because extrinsic motivations like cash are less important than more enduring intrinsic ones, such as finding meaning in work and feeling valued by your employer.


Rather than paying cash bonuses, he recommends companies think about different rewards that show employers are interested in their workers long-term health and growth, such as contributing to their children’s university funds. While it may seem paternalistic, it’s a recognition that life is difficult and that most people don’t save enough. A company that explained it’s looking out for families of its employees could be paid back with greater loyalty and effort.