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Beyond the Bonus: Driving Employee Performance

Posted By APSO, 19 January 2015
Updated: 18 December 2014

Organisations are only able to achieve success through their people and the hard work that they do. Managers and leaders play a key role in this process, co-ordinating groups of skilled individuals to meet shared team and organisational goals. Team members need to feel motivated, inspired and empowered by their managers in order to want to perform at their peak and one of the core challenges facing both leaders and organisations is how to connect with and motivate these groups of individuals to deliver as a team and ensure a productive and efficient workforce.

Ensuring employees enjoy their job is the single most effective way to motivate them to perform, with job enjoyment proving even more influential than salary in inspiring staff to work hard. In general, intrinsic motivators, such as how staff are treated and how well they get on with colleagues, were seen to be significantly more effective than extrinsic motivators like performance bonuses.





The Institute of Leadership and Management (ILM) research, conducted with over 1,000 employees in the UK, found that how much an employee enjoyed their role was the most important motivational factor behind their performance (59% selected it as one of their top three motivators). Basic salary (including pension), was shown to be the second most effective motivator for all employees (49%), followed by the quality of their relationship with their team and colleagues (42%).

Employees were asked to select three factors that influence their level of motivation to work as hard as they can. Intrinsic factors dominate four of the top five spots. Enjoying the role, getting on with workmates, how well they are treated by their manager and how much control they have over their work are all placed in the top five motivational factors.

When asked for one thing that would motivate them to do more, 31% of respondents suggested better treatment by their employer, including more praise and a sense of being valued, would be the most motivational thing their organisation could do.

Recognition, non-financial reward and support/ feedback are both highly motivating and increasingly desired by employees. Managers who are able to understand and utilise these tools effectively will be able to get the best out of their workforce and produce a happier, more productive environment.

Top Insights

·         Financial Incentives don’t work

While a fair and competitive base salary is a fundamental requirement for most people (it was a top three motivator for 49% of staff), additional financial incentives, such as performance bonuses, are shown to have little or no effect on commitment and performance for all but a small minority of staff (13%).

 

·         Positive Part-timers

Part-time workers were revealed to be significantly more motivated than full-time workers, with 76% classing themselves as ‘highly’ or ‘fairly’ motivated at work, compared to 68% of full-time workers.

 

·         Lost in Translation: Managers & Employees not on the same page

Managers generally feel that they are being quite effective at motivating their staff. Four out of five (82%) managers say that their staff know exactly what is expected of them and how their performance is assessed, while 84% say they get on really well with the teams they manage. In contrast, employees feel less positive about the impact their managers are having, with 58% saying they know what they are supposed to do and how their performance is assessed and 61% saying they get on really well with their manager.

 

·         Men and Women are not the same

Overall, women were more likely to say they were highly or fairly motivated (75%) than men (66%). Women are also more intrinsically motivated than men, with enjoyment of their job the most important motivator (64% chose it as one of their top three), followed by ‘how well I get on with people’ (44%) and base salary (41%). In contrast, men chose base salary and benefits (58%) as the most important factor, followed by enjoyment of their job (53%) and how well they get on with colleagues (41%).

·         Under 30s more financially driven

Employees aged under 30 were shown to be more financially motivated than their older colleagues, and more likely to receive financial incentives for work. A similar pattern is evident in their attitudes to money generally, with 12% of under 30s saying that money is the root of all happiness compared to 9% of over 30s.

·         Appraisals aren’t working

Two-thirds (61%) of employees say their workplace has an appraisal system, but a quarter of respondents (25%) think that appraisals are performed poorly by their managers. The research indicates that appraisals are less effective at driving the performance and motivation of female employees than their male counterparts, with women more likely to give examples of poor practice in the appraisal process (29%) than men (21%). In contrast, men were more likely to say the appraisal process had a bigger impact on their careers, with 40% of men saying appraisals impact their financial reward compared to 26% of women and 24% saying they lead to promotion compared to 15% of women.

This research shows that financial incentives are relatively ineffective motivators for the majority of staff. Instead, a focus on improving the workplace and developing management relationships is more likely to lead to effective and well-motivated teams.

Drive Productivity through Effective Employee Motivation

The ILM has outlined four steps you can take to improve productivity across your organisation without relying on financial incentive schemes.

1.       Job enrichment

Employees indicated that enjoyment of their job was the single most important factor in motivating them to perform in the workplace. Whether someone likes what they do is influenced by a variety of factors, but well-considered job design and the structure of a team can have a huge impact on how motivated an employee feels. Allowing employees to have autonomy in a role (important to 22% of respondents), frequent interaction with other colleagues and a chance to innovate can all improve their sense of job enjoyment and increase their level of motivation. Training managers to motivate staff and create an atmosphere where they are listened to, coached and given autonomy to perform can all impact on how much an employee enjoys their work.

2.       Base pay, not bonus

The research showed that additional financial incentives outside of the base salary package are relatively ineffective motivators. Despite this, financial incentives are still commonly used by employers in an attempt to generate high performance. While performance-related bonuses were largely ineffective, a fair financial package (base salary, benefits and pension scheme) was highly valued by employees and ranked as an important motivator. Instead of costly and ineffective bonus schemes, the research shows that increasing base salaries and investing in improving an employee’s basic enjoyment of their role would be more effective ways of improving performance. Non-financial recognition and reward, improved office environments, team and company away days and schemes that encourage innovation and creative thinking are all more effective drivers of focus, effort and commitment.

3.       Embrace part-time

Part-time workers in this research were more positive, motivated and engaged with their teams than their full-time counterparts. A growing proportion of the UK workforce is employed in part-time roles, and organisations that employ part-time staff are reaping the benefits of a talented and engaged workforce. Employers should not be afraid of creating a ‘decimal point’ in their workforce, designing and recruiting for jobs that fall outside the traditional 40-hour week standard. Embracing a more positive attitude to flexible working will also help employers retain talented staff who move from one stage of their career to the next and whose work preferences change.

4.       Develop interpersonal skills

How well employees got on with their managers, how well they felt they were treated and valued and the sense of control they feel over their work were all important to employees in improving their sense of motivation. Results show that managers can never do enough of the basics of good management, so developing your managers’ people management skills is essential in improving and maintaining motivation. Train managers to use coaching styles, give effective feedback and encourage a culture of innovation where employees feel free to contribute ideas. Appraisals were also identified as a weak point in the research, with many employees giving examples of poor practice. The challenge facing HR and L&D teams is to design and implement an effective appraisal process that clearly links performance with review and to ensure managers are trained in administering it effectively. Without these, appraisals will continue to have little impact on motivation and performance.


Extracts from: ILM Research Report “Beyond the Bonus: Driving Employee Performance”. The full report is available www.i-l-m.com The Institute of Leadership & Management (ILM) is the UK’s largest management development organisation. They are passionate about good leadership and management, and its power to drive organisational performance and wider economic prosperity.

Tags:  appraisals  APSO  APSOgram  bonus  interpersonal skills  job enrichment  motivation  performance  productivity  salary 

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