How to Better Motivate Employees? Try Categorizing Rewards and Incentives

In a novel research study carried out by S. Wiltermuth and F. Gino, a new link was explored between incentives and motivation. It is known that employees work towards achieving goals and targets, especially when they are aware of the rewards they are bound to receive for their efforts. However, the current research delves further into how incentives motivate employees and reveals that when rewards are divided into different categories, employees are even more highly motivated to reach rewards from each available category.

An employee will work hard to achieve a target, till the goal is reached and the reward is received. Unfortunately, they get the reward, an employee may not be motivated to get the same reward again. However, if the rewards are divided into different groups, employees are more likely to stay motivated or even become more driven to finish the task and receive a reward from a new category. Along with higher levels of motivation, the current research also suggests that employees actually enjoy their task more, when they can get rewards from different categories.

The simple reasoning behind this phenomenon is that when rewards are slotted in different categories, employees feel like they are missing out on a reward by not gaining one from each group. In order to fulfill this psychological need, employees work harder to complete a given task. The surprising fact being that employees would still feel like they were missing out on an opportunity to achieve more, even if the reward were the same, but belonged to a different category. Past research claims that an employee’s work motivation is closely related to the significance of the task at hand. When you offer rewards from different categories, employees attach a greater significance to the tasks linked to those rewards – this increases their drive to achieve. Also, the anticipated feeling of regret if they are not able to achieve a second reward keeps an employee motivated.

Knowing employees can be kept motivated merely by dividing rewards into any categories, even illogical ones, may have a downside. Management might use this information as the only source of motivation to get more work done for less, to an unjust level. Another downside to this phenomenon is that employees “game the system” realizing that a certain amount of effort and no more is necessary to gain different rewards. If work ethic is tightly linked to reward acquisition, rather than to overall task significance, then even when a situation demands a change to their working patterns, employees may not be willing to alter their behavior, unless the reward system is modified to justify that change. Therefore, though the current research shows us a useful phenomenon for motivating employees with limited incentives, managers must be careful not to depend to heavily on this one way of motivating, since such a strategy could have dire outcomes as well.