How Do You Motivate Your Employees?

During the mortgage foreclosure crisis, I served a two-year stint as CIO of Application Development for one of the nation’s largest providers of the service of process.

The firm grew rapidly and in just two years increased its headcount from 300 to more than 1,200. Employee workloads were grueling; many were asked to work weekends and evenings. While most received overtime pay, supervisors did not. It did not help that the banks were pushing our clients (the attorneys) to close foreclosure files at an unrealistic pace. In fact, our attorney clients would actually share competitor turnaround times in an attempt to apply even more pressure.

In such a fast-paced environment we struggled with how to reward hardworking employees. Though the CFO kept an arsenal of American Express Gift Cards in his office and freely gave them to deserving employees, I knew there had to be a better solution. Small annual raises were simply not working.

While I was not involved in the decision-making process the firm ultimately decided to award televisions, DVRs, and other items based upon performance – number of foreclosure cases closed, due diligence affidavits reviewed and completed, etc.

Of course, I cringed – especially when the weekly announcements were made over the intercom system at corporate. It was essentially the Gong Show meets the Price Is Right. Everyone knows who Bob Barker is but if you are too young to know what the Gong Show is Google it. (I watched it in re-runs.)

Were hourly employees cutting corners to close files for a chance to win a prize sometimes worth half their weekly salaries? Let’s hope not. I was also concerned that the rewards program could ignite a media firestorm since the foreclosure industry was under such scrutiny. The firm eventually halted the practice.

I was right to worry. A New York law firm closed after The New York Times published pictures from its 2010 Halloween party, which showed people dressed to look homeless and part of the office decorated to resemble a row of foreclosed homes. One person even had a sign around her neck that read: “3rd party squatter. I lost my home and I was never served,” apparently mocking the explanation of some homeowners facing foreclosure proceedings. The Times said the pictures were provided by a former employee.

Bank of America and others dumped the firm immediately.

In an earlier venture in the employee screening space I do have to admit that I would eavesdrop to find out what our employees wanted for the Holidays and other special occasions. Of course, we also paid 100% of healthcare, allowed casual attire, and offered flextime.

Is there a better solution? After all, most firms do not have an issue scolding employees for wrongdoing.

“You can get people to do more of something or faster for a little while if you provide them an appealing reward,” says Alfie Kohn, one of America’s leading thinkers and writers on the subject of money as motivator and author of Punished by Rewards. “But no scientific study has ever found a long-term enhancement of the quality of work as a result of any reward system. Bribes and threats can get you a short-term effect, but that’s it.”

He believes rewards programs can’t work because they’re based on an inadequate understanding of human motivation. One of the most thoroughly replicated findings in social psychology, he points out, is that the more you reward people for doing something, the more they tend to lose interest in whatever they did to get the reward. And when interest declines, so does quality.

Here are his thoughts:

Rewards control behavior through seduction. They’re a way for people in power to manipulate those with less power.

Rewards ruin relationships. They emphasize the difference in power between the person handing out the reward and the person receiving it.

Rewards create competitiveness among employees, undermining collaboration and teamwork.

Rewards reduce risk taking, creativity and innovation. People will be less likely to pursue hunches, fearing such out-of-the-box thinking may jeopardize their chances for a reward.

Rewards ignore reasons. A commission system, for example, may lead a manager to blame the salesmen when they don’t meet quotas, when the real problem may be packaging or pricing.

“Managers typically use a rewards system because it’s easy,” adds Kohn. “It doesn’t take effort, skill or courage to dangle a doggie biscuit in front of an employee and say, ‘Jump through this hoop and this will be yours.’”

A colleague is in the process of developing a software platform which allows employees to drive the recognition/rewards process. In fact, we recently published a post entitled, “101 Ways To Reward Employees (Without Giving Them Cash)”. Our takeaway: An extra PTO day can be golden. What do you think?

Additional Sources: American Workforce, Scott Hayes; The San Diego Union-Tribune, Carolyn Thompson