Paid incentives have meanings beyond money
The meanings of paid incentives for employees and organisations cannot only be measured in money. Anu Hakonen proposes in her dissertation for the Department of Industrial Engineering and Management at Aalto University that pay motivates more through symbolic meanings rather than through plain euros.
– Pinpointing the effects of pay and incentives to work performances has proven to be difficult. The research so far has been inconclusive. According to my research the meanings are born from meanings attached to the incentives, sums up Hakonen the result of her study.
Pay evokes meanings when they reflect success in work, an employee's position in the organisational hierarchy and respect from the management. The aspect of respect has mainly gone unnoticed up to now, according to Hakonen. She considers respect crucial for the functioning of the reward system in general.
– Respect is tied to the way the reward system is used in an organisation: to the justness, transparency and consistency of the management's operation, says Hakonen.
– Of course a remarkably high pay is incitement enough in itself, but the strongest motivation is borne out of symbolic meanings. It pays off to motivate people not only with money.
Paid incentives can also induce negative symbolic meanings. For instance reducing the amount of the reward can be interpreted as a lack of respect. The reward system may also seem as means of control and intrusion.
Rewarding as a systematic strategic tool
A well-functioning and motivational rewarding system has its roots in the organisation's strategy.
– The reward system should be a means of communicating the goals of the organisation to the staff. Goals tied to the overall strategy are seen as sensible and one's own work feels relevant and in accord to them. If the rewards encourage pointless operation, they may become insignificant, says Hakola.
When the staff knows the principles of the incentives and their connection to the work effort, positive meanings emerge: the compensation and the work done are in balance, and the rewards offer feedback from successful performances.
Haphazard or insufficient communication about the reward system can cause unawareness of and indifference towards pay and work assignments. Different groups inside an organisation should also be treated consistently and with open criteria. Doubts of unfair play in pay can easily make money redundant, eat away motivation and turn the meanings of the rewards from positive to negative.
– Supervisors can with their own activity increase effectiveness and meanings of paid incentives. It pays off to regularly remind the employees of their goals and give feedback when there is progress, points out Hakonen.
Motivational reward systems are usually a result of collaborative design between staff, supervisors and management. Hakonen emphasises the value of coherent and open actions of the management and active communication and feedback from supervisors.
– If the reward system is not regularly kept under check, it becomes hard to motivate with incentives. Perhaps the resources reserved for the reward system are then better spent on making the staff happy in some other way, suggests Hakonen.
Aalto University School of Science
Department of Industrial Engineering and Management
anu.hakonen [at] aalto [dot] fi
tel. +358 50 376 1083