It’s Not About Cash: Research-based Facts on Employee Engagement

As the founder and CEO of an enterprise gamification company, I am always on the lookout for interesting research about employee engagement. I’ve written about how people care more about team challenges than about individual ones, about how to move the needle on performance and how intrinsic motivation, the “third drive”, works. I love tracking this stuff: people like Dan Ariely are changing how we understand the world around us.

In this post, I want to point out three truths that are sometimes overlooked, despite their enormous significance to employee engagement, employee performance and how motivation is fostered, through gamification and other efforts.

It’s not about the cash: too much cash can actually be bad for motivation

A lot of current thought in gamification is concerned with the fact that extrinsic motivation (beating others in competition, getting cash rewards) doesn’t work well and that the secret lies in intrinsic motivation.

My favorite story here is an experiment performed by Dan Ariely in India several years ago. In some ways, its radical undercurrent is that maybe huge cash bonuses available in certain industries aren’t such a good idea…

Participants in the experiment were offered small, medium and large rewards for reaching performance levels in a game. A small reward was equivalent to what one could make in a day (a day’s wages), a medium reward was equivalent to what could be made in two weeks, and a large reward was equivalent to what could be made in five months (five months’ wages).

The results? The low and medium reward groups performed more or less at the same level, countering the belief that ‘the higher the pay, the higher the effort’. But the really surprising result is what happened to the performance of those with the five months’ wages incentives. Their performance was the poorest.

Ariely and his colleagues went on to conclude that “one cannot assume that introducing or raising incentives always improves performance”. This doesn’t of course mean that wages can be poor or low – wages should be fair. But expecting a wage increase or a bonus to increase performance isn’t the right way…

People really do need meaning at work

Another thing which is important to employees is the feeling that they are doing significant work. A psychological experiment shows how the feeling that one is fulfilling a significant goal, can have an important effect on the quality of work that they perform. Professor Adam Grant, from the Wharton School of Business, conducted an experiment to see how messages regarding task significance would affect the quality of work done by a university office contacting alumni to request donations.

Some of the employees received messages which touched on the personal benefits that they were receiving from the job. Things like the salary they were being paid to do the job and bonuses they could receive for a job well done.

A second group received messages about the impact that the scholarships that they were fundraising for would have and how these scholarships would enable students to achieve education and better lives.

A third control group received no message.

The employees in the task significance group were able to receive twice as many pledges and twice as much money for scholarships. They had the mental image of what they were working for in their mind, and it doubled their performance.

This is a great example of how a really small change can have a huge impact on the productivity of your organization.

When we talk about gamification, we call this “line of sight” – meaning that it doesn’t suffice to gamify activities to promote certain behaviors. You also need to create a “line of sight” between corporate goals and employee activity, so people know what they are looking for.

Meaningless work attracts meaningless performance

Employees need to feel that their work was not for nothing. In one of his TED talks, Dan Ariely tells the story of how he met a group of employees who had been working on a project for several years, only to be told that the project had been canceled. Following the lack of motivation and the apathy that the employees showed thereafter, Ariely was interested in understanding how doing meaningless work affects our motivation and desire.

To this end he designed an experiment where participants were given Lego pieces and were requested to build Bionicle figures. For the first Bionicle, the participants were given $3, for the second $2.70, for the third $2.40 and so on. In the first group, every time the Bionicle was completed, the figure was put away and new Lego pieces were given to the participant to build another figure, if they wished to do so. In the second group, when the first Bionicle was completed and handed over, they were given new Lego pieces, but the Bionicle that they had assembled was taken apart in front of their eyes, so that if they were interested in building another Bionicle, it was done from Lego pieces which they had previously used.

The results are quite amazing. In the first group, 11 Bionicles were assembled on average, while in the second group only 7 were assembled on average. Taking apart the Bionicles which the participants had already assembled took the meaning out of the work done and made it feel Sisyphean.

When Ariely spoke to the group of employees who had just had their project canceled, and which he described as some of the most depressed people he has ever met, he asked them how many of them feel like the second group in the experiment. They all did, apparently. He then asked – how many had started arriving later to work every day? Everybody raised their hand. How many went home earlier than they used to? Everybody raised their hand.

A sense of meaning is important to employees. One of the best ways of doing this is by giving ongoing feedback and guidance as to what has been done well and what can be done better. Gamification can be used in this field in two ways – both to help you monitor your employees’ progress and productivity and to allow them to see how they are doing for themselves. It is important to note that even though gamification mechanics enable employees to be fairly autonomous, there is still a basic need for feedback from employers, even if it is only to acknowledge the effort that is being made.