Awards VS Cash: Which has more impact on motivation?
Posted on October 29, 2019
Posted on October 29, 2019
When did awards become part of the fabric of our society? It’s a difficult question to answer since awards have been around for thousands of years. The Greeks used them for the Olympic games, Kings all over the world honored their best knights, on every continent history shows us that honoring and recognizing people using symbolic pieces has been a common theme in our societies.
In a cultural context, we rarely stop to think about the efficacy of awards, but in a business context, do awards really work? Does a year of service awards inspire and motivate someone? Does a prize for launching a new initiative foster innovation? Or should we just dangle a cash prize in front or someone to get maximum performance?
Economist Bruno Frey says that when awards are designed well, they can have a powerful effect on our behavior. In fact, he argues that awards are much more powerful than cash to increase motivation.
“When people are given an award, in general they are likely to work better, to be more engaged, to have, as we say, higher intrinsic motivation. That is, they like to work… and therefore are contributing really to the social good.” – Bruno Frey
One of the reasons for this behavioral effect is that awards are deeply social, versus a cash bonus, which is individual and typically rather secretive. Awards are usually given out at a ceremony in front of people whose opinions the recipient values, making the recognition feel all that more important.
Secondly, people care immensely about the prestige that awards can confer. If you’re an organization that doesn’t have the means to pay hefty salaries or if this bonus season appears bleaker than expected, awards can help you keep your troops loyal and motivated by showing them you care, and by giving employees a moment of glory that highlights their important contribution to the firm.
Lastly, awards create a bond of loyalty between the giver and the recipient. Frey gives the example; If you accept an award by the Queen of England, you cannot then turn around and say that she is a silly woman. That would be hypocrite! There are of courses cases in which people don’t accept the award, but in general, people do accept it, and that creates a new bond and special relationship between the 2 parties.
In short, as opposed to cash prizes, the benefits of awards are seen long after the initial glow wears off.
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