The 6 Rules for Rewards

As I wrote yesterday, handing out rewards to employees is often implemented through bonuses. A contra-productive method that (usually) does more harm than good.

Fortunately, there is some good news. Rewards that trigger intrinsic motivation are more effective and cost way less. Such rewards can work for your organization, and not against it. Just make sure you take the following six rules into account:

1. Don’t promise rewards in advance.
   Hand out rewards when people don’t expect them, so they do not change their intentions and focus on the reward. When acknowledgement of good work comes as a surprise, research says intrinsic motivation will not be undermined.
2. Keep anticipated rewards small. If you cannot prevent people anticipating a potential reward, keep the reward small (and make sure they know it’s small). Why? Because the anticipation of a big reward is likely to decrease people’s performance. This might be because the stress of anticipation will interfere with people’s working memory.
3. Reward continuously, not once. Every day can be a day to celebrate something. When people do useful work all the time, there’s always an opportunity for a reward.
4. Reward publicly, not privately. Since the goal of giving rewards is to acknowledge good work, and have people enjoy it too, everyone should understand what is rewarded and why. Therefore a regular public reminder works better than an annual private one.
5. Reward behavior, not outcome. Outcomes can be reached by a shortcut, while behavior is about decent work and effort. So focus on good behavior to learn people how to behave. When you focus on desired outcomes, people may learn how to cheat.
6. Reward peers, not subordinates. Find a way for people to reward each other, because peers often know better than managers which of their colleagues deserve a compliment.

These six rules for rewards give you the best chance at increasing people’s performance and engagement, while encouraging intrinsic motivation instead of destroying it. In my experience, an incidental compliment during a meeting for a job well done satisfies all six criteria.

It’s not that difficult to make rewards work positively for your organization. And if you do it well, it’s more enjoyable too.

This post is part of my new article called the Kudo Box. It has more suggestions for rewards and intrinsic motivation, including a list of literature references. If you want to stay up-to-date and receive all my upcoming articles, feel free to subscribe to my Management Workout mailing list.