𝗟𝗲𝘁’𝘀 𝘁𝗮𝗹𝗸 𝗮𝗯𝗼𝘂𝘁 𝗯𝗼𝗻𝘂𝘀𝗲𝘀. 💰
(Aside: in the UK we have many slang words for money… wonga, wedge, bread, bangers and mash, readies, shrapnel, wad, filthy lucre)
Now, during this cost-of-living crisis, it’s only natural that many of us would like more money in our pockets… especially when the holes in our pockets seem to be getting bigger and BIGGER.
With that in mind, many leaders are probably considering how they can get more money in their team members’ pockets without stoking the fires of inflation. 💰➡️📈🔥
If this is you….
You need to know… that not all methods of remuneration are the same.
Bonuses and wages have different effects on people’s motivation and decision making.
Now, you might be thinking…. “Andrew, why should I care?”
Well, if you want team members who are…
—> persistent (keep going with challenging tasks and projects)
—> taking ‘healthy’ decisions
… you must care.
𝐖𝐡𝐚𝐭 𝐚𝐫𝐞 ‘𝐡𝐞𝐚𝐥𝐭𝐡𝐲’ 𝐝𝐞𝐜𝐢𝐬𝐢𝐨𝐧𝐬?
Healthy decisions are those which support the long-term sustainability and flourishing of the business, your customer, the team, and the individual.
Unhealthy decisions can be made by anyone on your team. From the highest (Senior Execs) to the lowest (trainee).
Examples of unhealthy decisions…
🎈 Pumping the stock price by shifting sales to a share-friendly quarter
🛑 Holding back on investments that may negatively affect short-term value of business, but hugely increase long-term value of the business (link below)
💬 Misselling a product to a customer
🩹 Using temporary/dodgy solutions to finish tasks and projects faster
😇👹 Treating one customer well, and treating another customer poorly
𝗪𝗵𝘆 𝗱𝗼 𝗽𝗲𝗼𝗽𝗹𝗲 𝗺𝗮𝗸𝗲 𝘁𝗵𝗲𝘀𝗲 𝘀𝗼-𝗰𝗮𝗹𝗹𝗲𝗱 𝘂𝗻𝗵𝗲𝗮𝗹𝘁𝗵𝘆 𝗱𝗲𝗰𝗶𝘀𝗶𝗼𝗻𝘀?
Well, sometimes, people don’t know any better.
However, othertimes, they occur because people have been offered the wrong kind of motivation… BONUSES
You see, bonuses can lead to people making unhealthy decisions…. Decisions that are focused on achieving the bonus, rather than best supporting the long-term health of the business, customers, team, and individual.
Now, this isn’t true in all cases. But researchers have found that it’s true in many. (Comment below if you want the link to research… I’ll dig it out for you.)
BONUSES can lead to poor choices (like pretending that a project is okay) and errant behaviours (like when individuals trample-on-others so they achieve their bonus) .
𝗛𝗼𝘄𝗲𝘃𝗲𝗿, 𝘁𝗵𝗶𝗻𝗴𝘀 𝗴𝗲𝘁 𝘄𝗼𝗿𝘀𝗲….
BONUSES are an external form of motivation, and therefore a controlling form of motivation.
And people who are externally motivated often lack long-term persistence and engagement with tasks (proven in multiple tests).
So, bonuses can also be tremendously counter-productive… greatly reducing the motivation of team members.
𝗪𝗵𝗮𝘁 𝘀𝗵𝗼𝘂𝗹𝗱 𝗹𝗲𝗮𝗱𝗲𝗿𝘀 𝗱𝗼 𝗶𝗻𝘀𝘁𝗲𝗮𝗱?
✅ Increase wages rather than pay bonuses — wages are less controlling, and tend not to lead to unhealthy decisions.
✅If you must use bonuses…. Focus these on long-term goals and performance. Consider other criteria than ‘sales won’ or ‘tasks completed’. For instance, ‘customer feedback’ or ‘contribution to the team’.
✅Connect people with the values and big-mission (e..g, free books for all kids) that drives the business
What’s worked best in your business?
I would love to know. Please connect with me on LinkedIn and let me know.