Is money really the best motivator? We often think so – businesses use the promise of pay raises and bonuses to encourage top-tier performance. Even outside the office, we reward people with things like cash prizes and gift cards. Money inspires a temporary burst of high energy, but will people continue to put their best foot forward?
Research from Glassdoor's Q3 2015 Employment Confidence Survey implies the answer is no, at least when it comes to raises. Employees would much rather receive tangible benefits like health insurance and vacation days than a bigger paycheck. Performance bonuses ranked high on the list, but they bring up a new question. Does a one-time bonus improve long-term performance?
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A Bonus for Clean Hands
Susanna Gallani, an assistant professor at Harvard Business School, took a deeper look at how well money works as a motivator. She reviewed a case study from a California hospital that started a hand-hygiene improvement initiative. If the hospital workers washed their hands in accordance with guidelines from the Center for Medicare and Medicaid Services, employees would receive a $1,200 bonus.
The trick to this program, and the potential wrench in the system, came from the doctors. According to California law, physicians aren't hospital employees. This meant they weren't eligible for the performance-related bonus. However, their hand hygiene did factor into the hospital's overall score. If the doctors didn't wash their hands, everyone else would have been out of a bonus.
Gallani wasn't interested in whether the hospital achieved its hygiene goal. Rather, she wanted to know if money was effective at encouraging hospital employees to maintain their behavior – that is, to keep washing their hands even if they weren't going to receive a bonus.
Will Wash Hands For Money, But Maybe Not Forever
Ordinary employees were quick to fall in line with the hospital's initiative – they started washing their hands more frequently almost instantly. They also found clever ways to encourage physicians to wash their hands. Doctors who adopted good hygiene had their names placed on a wall and received a note of recognition from the chief nursing officer. Those who didn't were reminded about the importance of teamwork to achieve the hospital's goals.
Overall, the initiative was successful, and hospital employees across the board adopted better hand-washing habits. However, while the standard employees were the quickest to comply with the initiative, they were also the first to stop once it was over. Eventually, many of them washed their hands even less frequently than they had before the program started.
Doctors, on the other hand, were slower to adopt better hand-washing habits. Since they didn't have the promise of a bonus, encouragement from their peers was their only motivator. Despite their reluctance in the beginning, the doctors eventually improved their hygiene just like the rest of the hospital staff. What's more, they continued to wash their hands more frequently after the campaign was over.
This study casts doubt on the accepted idea that bonuses and monetary rewards are good ways to increase performance. They might provide a temporary boost, but once the incentives are taken away, performance falls back to its original levels. On the other hand, encouragement from other employees and frequent reminders of the goal at hand are more effective at encouraging behavior that employees maintain over the long term.