This eBook is meant to help businesses understand how different incentives can and should be used to achieve different types of objectives. Incentives have varying degrees of effectiveness based upon job type, generation and location. Program managers will gain valuable insights into how to tweak incentive mixes and what the most effective and efficient plan to achieve their goals will entail.

Moving MountainsHow Incentives Can Motivate Employees to Go the Extra Mile

Table of Contents

It’s a Tough Time to be an Employee ���� 3 Going above and beyond ���������������������������������������������������������� 4

The Truth About Big Paychecks ����������� 5When cash speaks loudly, and when it falls flat ������������������������� 5What the candle problem uncovers about cash incentives �������� 6

Great Managers Are Game Changers ��� 8Working for a manager ��������������������������������������������������������������� 8

Gaining and Keeping Control �������������� 10Rank & Yank ������������������������������������������ 11Threatening job security ������������������������������������������������������������11A look at Microsoft �������������������������������������������������������������������� 12

Intrinsic Motivation ������������������������������� 13Employees who motivate themselves �������������������������������������� 13

Working for the Weekend �������������������� 14The transformative power of rest ���������������������������������������������� 14

In Conclusion ���������������������������������������� 16End Notes ���������������������������������������������� 18

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28%

1 in 3 employees report being engaged at work� 1

4 in 5 employees who are dissatisfied with their managers are disengaged� 2

of millennials feel their company is taking full advantage of their skills� 3

It’s a Tough Time to be an Employee

You have probably heard the facts about low engagement and motivation in the United States before, but just in case, here’s a refresher:

Unsettling as those numbers are, one question not enough people are asking is: what positively motivates my employees? With the litany of reasons to be pessimistic about the outlook of employee engagement, those planning incentive strategies should embrace the employee perspective in order to determine what motivates employees and why�

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Top 10 Professional Motivators

As you plan a rewards and recognition program, the question shouldn’t be ‘what motivates my employees to come to work?’, it should be ‘what motivates them to go the extra mile?’ Anyone can hire employees to sit in a room for 8 hours a day, but companies and organizations who wish to grow, innovate and maximize their investment in outstanding people should be actively looking for ways to reciprocate the loyalty their employees demonstrate� Ask yourself ‘who do your employees work for?’ The answers can say a lot about your employee engagement levels and what really motivates you and your employees to obey your 7:30 AM alarms�

In 2014, Forbes and their partner, TINYpulse, wondered what motivates employees to go the extra mile and found some interesting and unexpected results� Money and professional growth both ranked relatively low compared to camaraderie and intrinsic motivators� In this resource we will explore several of these factors and discuss the situations in which it’s most appropriate to use strategies targeting specific motivators. 5

Going above and beyond

“Motivation is powerful� It predicts success better than intelligence, ability or salary�” 4

Camaraderie, peer motivation (20%)

Intrinsic desire to a good job (17%)

Having a real impact (10%)

Growing professionally (8%)

Money and benefits (7%)

Positive supervisor/senior management (4%)

Believe in the company/product (4%)

Other (9%)

Feeling encouraged and recognized (13%)

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Obviously, money is high up on everyone’s list of motivators because we all have certain needs that must be met in order to live sustainably� However, program managers and HR professionals should be warned that monetary incentives can be extremely problematic for organizations struggling with efficiency. Research suggests that for dynamic tasks that require higher amounts of cognitive skill, cash and tangible incentives often decrease employee efficiency. Author Daniel Pink gave an excellent TED talk where he points out there is actually an inverse relationship between the size of a tangible reward offered and the efficiency at which someone performs when given a complex task� 6

The task Pink was referring to (The Candle Problem) is a famous experiment that a psychologist named Karl Dunker came up with that requires participants to light and fix a candle to a wall in such a way that the wax doesn’t drip onto the table� They can use only the matches, the box of thumbtacks and the candle itself� Most people attempt to nail the candle to the wall or to melt the bottom of the candle and glue it to the wall� The solution (right) requires the participant to overcome thinking about the box of thumbtacks as a container for the thumbtacks and place the candle inside it while fixing the box to the wall�

The Truth About Big PaychecksWhen cash speaks loudly, and when it falls flat

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So, let’s bring money into the picture� Psychologist Sam Glucksburg wondered how cash incentives would effect people’s efficiency solving the candle problem� What he found was fascinating: the higher the cash reward, the worse participants did performing the candle task. The key finding was that tangible rewards actually had an inverse relationship with participant’s performance efficiency. 7 The larger the cash reward, the slower the average solution took participating groups. Author Daniel Pink (who wrote about these experiments and others) offers a severe warning that when used thoughtlessly, “rewards just motivate people to get rewards; when the rewards stop, people stop�” So as you design an employee engagement solution, remember to use tangible rewards to facilitate grander, intangible motivators and don’t merely pay off employees�

What the candle problem uncovers about cash incentives

Participants struggled so mightily with this task because they had difficulty overcoming thinking about the box of thumbtacks as anything more then a recepticle for the thumbtacks� This is because of a bias called ‘functional fixedness’. The bias limits people to viewing people and objects in the world as a means towards traditional ends� Although it’s easy to fall victim to this sort of compartmentalized worldview, we have to stop thinking of developers as the people who fix our computer problems, marketers as the people who spread the word about our ideas etc� Instead, to motivate our employees, we have to start conceptualizing our workforce holistically, understanding that people are incredibly dynamic and can be a means to multiple ends�

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Performance-based cash bonuses

Increase in base pay

Stock or stock options

Praise from immediate manager

Attention from leadersOpportunities to lead projects or task forces

This means managers and incentive program administrators must clearly define goals for their program before they start assigning rewards. If your business is struggling with efficiency and a majority of their workforce performs tasks that require a high degree of cognitive skill, cash is not a suitable incentive to combat efficiency struggles. In 2009, ‘McKinsey Global’ surveyed 1,047 executives about the effectiveness of three non-financial and three financial incentives they used as part of their solution. They found that all three non-financial incentives outperformed the financial incentives (results shown above)� 8

It’s important for managers and program administrators to understand that these nonfinancial priorities may not have always carried the weight they do today, but this generation’s average employee is fundamentally different� We can think about the use of cash versus non-cash incentives in two ways: the extent to which they boost engagement and their practical applications� The extent to which non-cash incentives boosts engagement depends heavily upon the work situation at your company, but compared to tangible incentives, they are often the better choice� Practicality and tangible application are also important considerations for your incentive strategy because what good is an employee engagement incentive if you cannot use it? There are a number of reasons a company might have difficulty implementing the nonfinancial incentive strategies like those shown above� Habitual behaviors and lack of training by managers can make it difficult to offer these opportunities on a consistent basis� But what is most important to note about the McKinsley Global case study is the disconnect between what we know to be most effective and what we are actually doing in offices across the country.

Financial Incentives

Nonfinancial Incentives

Effectiveness% of respondents answering ‘extremely’ or ‘very effective’

Frequent Use% of respondents answering ‘always’ or ‘most of the time’

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60

52

35

68

61

24

67

63

62

63

41

54

It might sound silly to say a person works for their manager, but personal relationships are intrinsic motivators that hold far more power than any reward or compensation� Rewards and recognition solutions should be implemented as a means of facilitating personal relationships instead of a ‘cattle prod’ that makes employees work faster or harder�

Additionally, in today’s multi-generational workforce, there is a fundamental difference between the ways Millennials and past generations think about work� Today’s employees are prioritizing strong relationships with their managers and are less insistent about other factors� 9 In 2015, one study showed 50% of workers said bad managers were the reason they left their job� 10 In this case, employee engagement levels are strongly tied to a relationship with a supervisor�

Some of these challenges stem from an inherent ‘strangeness’ of hierarchical relationships between a managers and employees that is difficult to ignore. The modern employee has responded to this challenge by realizing it is considerably easier to sort through the ‘strangeness’ when they feel as though they can joke about it with the person asking for their weekly reports�

Working for a manager

Great Managers Are Game Changers

WORLD’S

BESTMANAGER

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“Millennials do not believe that productivity should be measured by the number of hours worked at the office, but by the output of the work performed� They view work as a thing and not a place�” 11

Outstanding managers come in many different shapes, sizes and ages; and they can have different management styles and personality traits� What’s consistent as far as engagement is concerned, is employees whose managers invest in their relationship are highly engaged compared to their peers� Let’s face it, other than their bedrooms, employees spend more time in their desk chairs than anywhere� Spending those hours amongst people they like and respect is an extremely significant motivator.

As program managers design rewards and recognition solutions to fit the needs of their staff, promotions that facilitate social connections between manager and employee are a fantastic way to engage all generations and especially millennials� One example of a measurable promotion that facilitates manager-employee relationships exists at Perks as part of our recognition platform� Perks has created a special promotion called “Manager to Employee” that allows managers to reward employees for tasks that are relevant specifically to their department or for exceptional work� These recognitions are still public, but are displayed as coming directly from a manager to his or her employee, which adds extra importance for the employees being recognized� This designation is crucial because it distinguishes a recognition that might be dismissed as a formality (coming from the company) from an award that feels personal� In addition to the recognition being personal, it’s important that this award include specific information about which behaviors are being recognized� Consistent evaluation is a major pain point for disengaged employees, and simple promotions like these can really help managers and employees get on the same page� 12 The more avenues of communication program managers can create between managers and employees, the more successful and productive those relationship will become�

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For many of us, no matter how long we have been with a job, there was once a time we didn’t feel in control of our work life. Task based workflows are where most young employees begin� Slowly, as an employee develops, they are given more and more control over their workload and decisions that affect the rest of the company� Expanding responsibilities are a natural onboarding progression, but did you know that autonomy is the number one predictor of happiness in the workplace? New psychological research shows that not only does autonomy predict happiness, but it’s also “important for reducing negative psychological symptoms” associated with retention issues� 13

There are a number of ways for employees to feel in control, and they range from getting promoted to decorating their workspace� Professional growth is a large scale change that helps employees feel in control, and it’s ranked 5th on our list of motivational factors. Despite not being a top priority, it’s clearly still on the mind of our workforce� A small scale change that can also help employees feel in cotnrol is encouraging employees to decorate their spaces. Bringing personal artifacts to work is a terrific and easy way to make them feel in charge of their enviornment� According to Herman Miller, “Having some control over the workspace [improves] comfort, and [reduces] stress”� 14

In addition to affecting their efficiency, lack of control can put employee health at risk� Environmental and professional ‘decision making control’ can actually reduce health problems over time� 15 For the good of our health it’s important for us to ‘share the reins’ with those around us and relinquish control on certain occasions for the good of the company�

As you design a rewards and recognition solution, try to come up with opportunities for employees at all levels and all departments to take control of specific projects or tasks. These opportunities could range from a ‘business improvements’ promotion where you ask for your staff’s opinion to delegating important responsibilities� What’s most important is that employees of different temperaments, business areas and statures engage and take ownership of specific, meaningful projects. Incorporating the delegation of responsibilities into your rewards and recognition solution not only has the potential to increase your efficiency, but it’s also an excellent way to boost engagement�

“Having some control over the workspace [improves] comfort, and [reduces] stress”

Gaining and Keeping Control

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It feels draconian and outdated, and you would be hard pressed to find any company that openly admits to this strategy, but many businesses in the US still use some form of negative reinforcement to motivate their employees�

Rank & YankThreatening job security

GE’s Jack Welch is the most well-known advocate of what is called “the 10% rule” or “rank and yank”� The underlying idea is that businesses should be ranking their employees into a top tier, middle tier and a bottom tier and get rid of the bottom tier of employees each year�

It’s pretty easy to poke holes into this type of ideology at first glance. Welch argues that businesses owe employees a higher degree of ‘candor’, and it’s our duty as managers to be honest with them about where they stand within a company� 16 Welch has a good point here, as clearly identifying and outlining high level goals is an extremely important factor in employee motivation� Evaluating their performance is also crucial to companies in the process of aligning their objectives� Plus who can argue with a 28 fold increase in revenue between 1981 and 2001 (often cited by proponents of the policy)?

The problem for Welch is that it’s not ‘candor’ that frustrates most people in the engagement field about his policy. 17 They instead take issue with his assertion that employee performance should be measured against other employees instead of against goals you and your employee set together�

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8% 58%of companies said employee

performance ranking systems drove higher levels of value�

of companies said employee ranking systems were not an effective use of their time� 18

"My personal feeling about the organizations that make it a hard and fast rule to fire people? They aren't doing a particularly good job in how they hire�"

Tech giant Microsoft took hold of Welch’s arguments and decided to implement a “rank-and-yank” style system, with the hopes it would drive value and encourage employees� The results were fairly damning:

In 2013 Microsoft officially killed their performance ranking system and cited ‘workers fighting for themselves and their jobs instead of for the company’ as a reason for the program shutdown� In addition, some felt that a ‘cultural civil war’ was emerging between those reaping the benefits and those scared for their livelihoods. But no problem was more significant than the tendency to hire under-qualified candidates to skew the ‘bell-curve’ and maintain job security� While other tech giants Google and Facebook were providing additional value to their shareholders, Microsoft offered very little to theirs during the “rank and yank” years� 19

Microsoft wasn’t the only company who implemented a negative reinforcement program and watched it fail; Enron and Motorola instituted these programs and found similar epidemics within their company culture� What’s important to understand is that with a sound hiring process, there is no reason to assume employees are underperforming� As you prepare an incentive strategy for your business, citing your employees ‘having a job at all’ as an incentive simply is not enough to drive growth� Nobody is suggesting giving employees unconditional job security regardless of their performance would be beneficial to businesses, but negative reinforcements don’t drive growth. These case studies strongly suggest creating an atmosphere in which when someone ‘wins’, someone else has to ‘lose’ is highly problematic�

A look at Microsoft

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Intrinsic MotivationEmployees who motivate themselves

The most powerful motivator of all is that ‘inner-spark’ that gives your co-worker the pep in their step, or the curious twinkle in their eye� The employee who comes to work every day because they believe in what they are doing or love the field they work in will undoubtedly perform at their highest level.

Just ask Google how their 20% time program has delivered results for them� The program allows employees spend a fifth of their time on side projects or professional development� This program accounted for 50% of the new products Google released each year, including apps like Gmail and Google News� 20 Another example is Atlassian (creators of the ticketing software “JIRA”), which runs a similar program called ‘Shipit’� Each quarter, they take an entire day to develop creative ideas independent of their employees’ other work� 21 At these companies, employee engagement is tied to their desire to learn, deliver a great product and collaborate with their peers� Both examples are excellent examples of policies that foster intrinsic motivation and carry the most power� Having employees who work for themselves doesn’t mean removing managers and allowing the office to turn into a lawless swamp. It means redefining work as a ‘thing’ that teams build together instead of a ‘place’ where workers show up� 22

For businesses struggling with employee retention, giving employees the freedom and space to work for themselves can elevate a good company and make them great� Intrinsic motivators are about offering autonomy, but they also depend on education� As you plan your incentive solution, no matter what your challenges are, make sure you are giving your employees incentives and opportunities to get better at their jobs� It’s important to make it crystal clear in your company’s culture that no matter what level you are at, there is always more to learn� The goal is to produce employees who want to perform at a high level because they appreciate both the hard work associated with success and the sense of accomplishment they feel when reaching a milestone� By giving employees ideological freedom and encouraging them to educate themselves, you will be well on your way to boosting engagement and innovation in your industry�

Giving employees the freedom and space to work for themselves can elevate a good company and make them great�

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Working for the WeekendThe transformative power of rest

Who knows where it originally started, but too many of us hold a misguided belief that more hours increases our output, when in fact it can really hurt our efficiency.

How do we know? The folks at the Cornell University Ergonomics Lab conducted a study at New Global where they were able to measure how effective employees were with and without breaks� They set up computer alerts on employee computers reminding them to take frequent breaks and found that employees who received the alerts made 13 percent fewer errors than those who didn’t� There is a big difference between an employee who works 10 hours a day unproductively and one who is efficient with his/her time�

The American work calendar year can, for some, feel endless regardless of how competent someone is� Simply knowing there is a break in sight can be a source of relief and added engagement� There are many employees for whom vacation and time away from the office is more motivating than tangible, intrinsic or even interpersonal motivators�

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70%of respondents from organizations with “Use it or Lose it” policies believe that employees who take all of their vacation will stay with their jobs longer� 24

A variety of factors can influence an employee's desire for increased vacation time such as an out of town family member, a long distance relationship or an itch for travel; and none of these should be seen as indicators of a non-engaged worker� It’s important not to mistake someone’s desire for vacation as a dissatisfaction with their job� 23

Companies are responding to these desires in a number of ways� The advent of remote working technologies has made it easier for employees to maintain productivity all over the world� Some businesses are increasing paid leave and offering employees more flexible work schedules, encouraging them to take ownership of their work-leisure balance� A few companies have even removed their limits on vacation days and allowed managers the freedom to grant their employees vacation time at their own discretion�

Incentive programs that incorporate vacation days and travel opportunities understand that employees need time away from their desk to be at their most effective� In fact, 77% of HR managers say employees who use most of their vacation time are more productive� 24

"The impact that taking a vacation has on one's mental health is profound�" 24

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In Conclusion

There’s a lot of misinformation out there about what truly motivates employees of all shapes and sizes� The truth is that most employees possess the same desire for success as the executives who oversee them� There are four overarching keys to engaging these employees using all of the factors detailed in this eBook:

Put a good, solid roof over their heads

In most cases, there isn’t a ton that companies can do to combat disengaged workers who want to be paid way more than the company can afford� In most cases though, if employees are paid a fair amount based on their worth, they won’t need to spend time thinking about financial compensation and can focus on higher level goals. The danger of relying too heavily on monetary rewards is that we are training people to find the quickest path to the largest reward as opposed to contributing to team oriented goals�

Mutual trust

Getting employees to move mountains can often be a matter of trusting their ability to do so. Decision making control and autonomous work are excellent reward and recognition components, and their growing effectiveness is proof that driven employees can do even more for your company if given the opportunity� Leading companies have excellent hiring processes, and companies with solid standards have no reason to presume their workforce is underperforming�

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Make sure your goals are crystal clear

Having a clearly defined sense of purpose among employees is how, on any given day, a member of your company can answer the question ‘why am I doing this?’� There is nothing that will plummet employee engagement faster than a feeling of confusion about how certain actions are benefiting the organization. In addition to benefiting employees, defining goals for your incentive program can help you select the right incentives for your company based on pain points and long term goals�

Break the ice and facilitate great relationships

Millennials are entering the workforce in massive numbers, and companies need to understand what really matters to millennial employees; relationships with their coworkers and specifically their boss� People are much more willing to go the extra mile for people they trust and have personal relationships with� Effective incentive programs can take advantage of these desires by facilitating direct and consistent communication and creating social opportunities for these connections to grow over time�

In a short fable about human nature, author David Rakoff wrote that despite the realization, it opens the door for possible mishaps: “we’re creatures of contact,” and our offices are no different. 25 The key to getting the most out of our employees and peers is trusting each other, our environments and our goals�

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End Notes

1� Gallup, Employee Engagement in U�S Stagnant in 2015 http://www�gallup�com/poll/188144/employee-engagement-stagnant-2015�aspx?g_source=EMPLOYEE_ENGAGEMENT&g_medium=topic&g_campaign=tiles

2� Dale Carnegie Training, Employee Engagement http://www�dalecarnegie�com/employee-engagement/

3� Deloitte, The 2015 Deloitte Millennial Survey http://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-wef-2015-millennial-survey-executivesummary�pdf

4� Eric Barker, Time Magazine, How to Motivate People: 4 Steps Backed by Science http://time�com/53748/how-to-motivate-people-4-steps-backed-by-science/

5� Victor Lipman, Forbes, New Study Answers: What Motivates Employees To ‘Go The Extra Mile?’ http://www�forbes�com/sites/victorlipman/2014/11/04/what-motivates-employees-to-go-the-extra-mile-study-offers-surprising-answer/#6e4fccf5636a

6� Daniel Pink, TED, The puzzle of motivation http://www�ted�com/talks/dan_pink_on_motivation?language=en#t-253065

7� Chris Wondra, We Teach We Learn, The surprising truth about incentives http://www�weteachwelearn�org/2012/12/the-surprising-truth-about-incentives/

8� Martin Dewhurst, McKinsley & Company, Motivating people: Getting beyond money http://www�mckinsey�com/insights/organization/motivating_people_getting_beyond_money

9� Lisa Evans, Fast Company, This is How millennials will change management http://www�fastcompany�com/3052617/the-future-of-work/this-how-millennials-will-change-management

10� Benjamin Snyder, Fortune, Half of us have quit our job because of a bad boss http://fortune�com/2015/04/02/quit-reasons/

11� The Atlantic, Attention Employers: Millennials Have Made their Demands http://www�theatlantic�com/sponsored/allstate/attention-employers-millennials-have-made-their-demands/219/

12� Carol Deeb, Demand Media, How Employee Evaluation May Be Used to Increase Employee Retention http://smallbusiness�chron�com/employee-evaluation-may-used-increase-employee-retention-41421�html

13� American Psychological Association, Money Can’t Buy Happiness http://www�apa�org/news/press/releases/2011/06/buy-happiness�aspx

14� Herman Miller, It’s All About Me: The Benefits of Personal Control at Work https://www�hermanmiller�com/MarketFacingTech/hmc/research_summaries/pdfs/wp_Personal_Control�pdf

15� Michael O’ Neill, Ph.D., Measuring Workplace Performance. (Boca Raton, Florida: CRC Press, 2007): 112-113�

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16� Drucker Institute, Why “Rank-and-Yank” Rankles Jack Welch http://www�druckerinstitute�com/2013/11/rank-and-yank-jack-welch/

17� Paul B� Brown, Inc�, Should You Fire 10% of Your Employees Every Year? http://www.inc.com/paul-b-brown/should-you-fire-10-of-your-employees-every-year.html

18� Alex Nabaum, Deloitte University Press, Performance Management is Broken. http://dupress�com/articles/hc-trends-2014-performance-management/

19� Forbes Leadership Forum, Here’s To The Death of Microsoft’s Rank-And-Yank. http://www�forbes�com/sites/forbesleadershipforum/2013/11/13/heres-to-the-death-of-microsofts-rank-and-yank/#1d8503716b13

20� Julie Bick, New York Times, The Google Way: Give Engineers Room http://www�nytimes�com/2007/10/21/jobs/21pre�html?_r=0

21� Atlassian, ShipIt https://www�atlassian�com/company/shipit

22� The Atlantic, Attention Employers: Millennials Have Made their Demands http://www�theatlantic�com/sponsored/allstate/attention-employers-millennials-have-made-their-demands/219/

23� Derek Thompson, The Atlantic, The Case for Vacation: Why Science Says Breaks Are Good for Productivity http://www�theatlantic�com/business/archive/2012/08/the-case-for-vacation-why-science-says-breaks-are-good-for-productivity/260747/

24� Project Time Off, Vacation’s Impact on the Workforce http://www�projecttimeoff�com/research/vacation%E2%80%99s-impact-workplace

25� David Rakoff, NPR, The Scorpion and the Tortoise http://www�thisamericanlife�org/radio-archives/episode/389/transcript

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About Perks | Employee

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Perks | Employee offers global rewards, recognition and retention programs for some of the most influential compa-nies in the world� With a listing on the Salesforce AppExchange and a global user base of over 7�5 million people, Perks takes the guesswork out of figuring out what drives employee behavior. Rewards and Incentives all backed and supported by years of expertise and our Science of Motivation™ platform� For more information visit us at www�perks�com or contact us at 866�4�Perks�1 or at perksmarketing@perks�com�

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