Business Finance

Employee motivation can be hurt by cash bonuses

employee motivation

Traditional knowledge dictates that employee motivation centers around a paycheck, but times are changing, as are reasons for employee loyalty.

employee motivation

Employee motivation studies offer new surprises

When it comes to employee loyalty, morale, and motivation, money isn’t everything, which may be somewhat surprising for you. Don’t get us wrong; money is a good motivational tool, but according to this infographic, there are other more successful ways to motivate your employees to keep working hard with the good of the company in mind. This is actually great news for business in general, especially for small business owners who don’t have the ability to continue to increase salaries or bonuses several times a year.

Money isn’t always the answer

Here’s what it comes down to, according to McKinsey Quarterly:

Praise – This is the most preferred method of motivation, topping the list at 67% who prefer this method. Praise in the workplace is all about acknowledging your employees’ professional achievements. Everyone likes to be told they’re doing a great job in general and specifically when they have completed a project or assignment. This type of feedback is truly invaluable to both employers and employees.

Personalized Attention – Second on the list is all about receiving personal attention from upper management. This could be as simple as telling your employees you appreciate their hard work and they are a part of the company family. It’s about getting to know your employees as professionals and individuals, and then appreciating their uniqueness. Just the knowledge that those in leadership roles are aware of who they are can bolster their sense of community and unity within the company. And isn’t that what every company needs from an employee? 63% of those polled said this was the most effective way to motivate them.

Leadership Opportunities – Many employees—an estimated 62%, to be exact—want opportunities for growth and better leadership opportunities. Not only does this show them that upper management acknowledges them, but it shows them you know they’ve done a good job and will continue to do a good job.

Cash doesn’t always rule the world

In some cases, money can actually hurt employee motivation. Employees want to feel engaged and appreciated. Money can be so impersonal and even cold, especially when employees just want to be an important part of something bigger than themselves. Again, money is important so your employees can live and support themselves and their families, but it’s not the most important thing you can do for those who work for and with you.

Showing your appreciation to your employees can do more for employee morale than just a raise. Show your employees they’re an integral part of your work family. Show them as you would members of your own family, with gratitude, support, and reassurance through kind gestures and words.



  1. MattThomson

    January 30, 2013 at 11:13 pm

    Hmmm…my co-workers can have my praise and attention, I’ll take their cold, impersonal cash bonuses!

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