Steven's Blog

The Fallacy of Monetary Incentives

Most leaders view monetary incentives as the most important driver of performance, whereas most employees view it as the least important. Monetary incentives reduce performance to an economic transaction—an offer for a price—which he or she may accept or walk away from.

Your best employees perform well because good performance is part of who they are and what they do, regardless of the incentives on offer. I have never seen a top employee deliberately reduce performance simply because a bonus is not on offer. I have also never seen a mediocre employee improve performance simply because more money was at stake. Some non-performers have even told me candidly that they have enough money, and the extra effort isn’t worth the bother. For example, a senior manager who despises learning English once told me as much despite facing a significant salary cut if his TOEIC scores did not improve.

Growth-oriented people are driven by challenge more than by money. They seek out difficult assignments that will force them to learn and grow. They do not fear failure, but rather view failure as part of learning. People who have such mindsets are consistently top performers.

People who have these mindsets are consistently top performers. Click To Tweet

If you want to motivate the people you lead, mete out challenging assignment beyond the current capability of each member. Force them grow. Allow them to fail, but insist they learn from failure, and not make the same mistake twice. This is what will motivate the best performance in your best employees.

However, not everyone is growth oriented. Some will walk away from challenges because personal growth is simply not of interest to them. This is a matter of their own personal values, and you are not going to fundamentally change an employee’s values, or anyone’s for that matter, simply by offering money.


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