Employee motivation: How NOT to reward teams

Employee motivationMotivating employees has been a challenge for employers. Investment banks and consulting firms use year-end bonuses as the reward. Companies in other industries have their own way of doing the same. Teamwork (sometimes) gets the recognition, but individual employee contribution gets the mouth-watering reward. Do you think there’s something wrong about the approach?

Avinash Errigineni seems to have cracked many of the theories taught in Bschools. In this guest post, he combines his two interests – management topics and writing. His short but well-researched article (which seems more like a whitepaper than a blog post) exploring the flaws in employee motivation practices includes management theory, case studies (with a desi touch) and references…and he doesn’t even have an MBA yet.

Employee motivation theories may not always work
by Avinash Errigineni

Operations that most organizations do are so complex or diverse that they need individuals of different expertise to work together and deliver as a team. Whether they are engineers in a technology company or delivery boys of a fast-food restaurant, team work is of paramount importance as the quality of delivery depends directly on the ability of individuals to work together.

In most teams, no two individuals are the same. Each member has expertise or qualities that are unique to him or her than those that are shared with others. Some may be creative, some extremely hardworking, some good at leading from the front, and of course in teams that are not perfect, there may be members who ride on the success of others or the collective success of the team. Presumably, the performance of each individual may vary too. High performers, for example, shoulder more responsibility and their output may be well above that of an average performer.

How does one get everyone to perform at the level of a high performer? Bring in performance rewards. Well, that is at least the answer many managers seem to resort to. The reasoning behind this being that if there exists a system that rewards the highest performer(s), everybody in the team will be motivated to earn the reward, and there by perform to his or her potential. And, when everybody performs to his or her potential, more often than not, it results in a team full of high achievers and the collective performance of the team hits the roof. There is hardly anything wrong with that thought process.

Gem of an idea, isn’t it?

There is more than what meets the eye here. There are a number of problems that rewarding individuals on performance overlooks. For starters, how does one measure the performance of an individual? Are there criteria to measure the effort? If so how fool-proof are that criteria.

For argument’s sake, let’s assume there are strong criteria that measure individual performances accurately and based on the criteria, the top performer(s) are picked and rewarded. In this case, while some will be delighted that their efforts have paid off, the other not-so-fortunate ones may resent. But, that is not the end of the story.

Rewards are never a one-time thing. They happen in cycles, whether it is monthly, quarterly, semi-annually, or annually- the value of a reward being inversely proportional to its frequency. The cycle offers an easy way out for managers: rewarding different people in different cycles so that everyone (at least the ones who really matter) is happy. Given enough cycles, almost everyone gets rewarded in one way or the other. When one has been through this process, receiving a reward becomes merely a perfunctory task rather than a motivating experience.

Also, in cases where the frequency of a reward is low and the value is high, managers may not have the luxury of pleasing everyone, resulting in resentment among team members. Here, a process that exists to motivate people could end in achieving exactly the opposite.

Let’s rethink for a second. We made an assumption that performance can be quantitatively measured. This by all means is quite far-fetched. We can better understand this with the example of cricket, where performance is generally quantitatively measured: ranging from the heart beat of a player to the number of centuries one has made.

We all know India beat Sri Lanka in the 2011 cricket world cup final, an achievement, with the exception of the 1983 WC win, second to none in Indian sport. M S Dhoni was awarded the man of the match for his knock of 91*. Many may opine that his score was invaluable, and that he was rewarded for staying till the end of the match and knocking the final runs off. But, there are millions who think Gautam Gambhir, for his 97, should have been awarded the Man of the Match, it was he who, with a crucial partnership with Virat Kohli, brought India back into the game, they may argue.

The reality is that in an environment where a team’s success depends on a number of individuals contributing together, it is impossible to pick one performance as the cause for a result, no matter how quantitatively an individual’s effort can be measured. If you ask either Dhoni or Gambhir, they will tell how little that man of the match award means when compared to the victory of the team.

Then, the experts’ (commentators) task of picking one individual as a chief contributor is as futile as separating milk from water, don’t you think? Typically, in most organizations performance is judged by appraisals, which are mere opinions that are subject to a number of conditions. Unlike in Cricket, here there are very little statistics to go by. If a reward system is driven by opinions rather than by facts, the system becomes all the more incredulous.

Certainly, not all organizations work this way. Morning Star- featured as a cover story in the December 2011 edition of HBR – is an excellent example of a company that is managed creatively. Not only are there no performance rewards, there are no bosses, titles or promotions, yet it is a very successful company that generates revenues in excess of $700 million. It is also the world’s largest tomato processor.

By taking money, power and other short term benefits out of the equation, Morning Star is encouraging its employees to work as a team towards one common goal- to serve its customers great products. If one can see beyond the cloud of smoke, monetary benefits or rewards directly tied to performance are not prime motivators. Other rewards such as flexibility, recognition, trust, and empowerment can be more efficient in getting a team to deliver to its potential.


Avinash, an engineering graduate from BITS Pilani Dubai, works as a test engineer in the R&D Services of an IT firm. His interests include badminton, table tennis and reading (though he admits he has never tried all three together). He dreams of being an entrepreneur someday.

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Sameer Kamat //
Sameer Kamat
Founder of MBA Crystal Ball. Author of Beyond The MBA Hype & Business Doctors. Here's more about me. Connect with me on Google+ | Twitter | Facebook | Linkedin

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