Do Bonuses Really Help Engage Employees?

Bonuses come in a variety of shapes, sizes, colors, flavors, and amounts.

Some companies offer regular performance bonuses, including the elusive on-the-spot bonus when the big boss walks by; other companies have a structured, period-based bonus program: did we hit our targets for Q1? Excellent  — everyone benefits; still other companies dole out bonuses once the holidays arrive (perhaps to meet perceived pressures of expectation).

That’s great and all, but not all of these bonuses engage — and those that do create quickly fleeting levels of engagement. What gives?

Are bonuses detrimental to employee morale?

Our conversation needs to go back to the discussion of the differences between satisfaction and engagement — the former being comprised of elements like compensation (both regular and bonus); the latter, of elements that directly impact levels of meaning, autonomy, growth, impact, and connection.

According to Lalin Anik and Jordi Quoidbach (in an HBR blog), “Individual rewards … have been shown to be detrimental to employee morale and productivity.” Roughly translated, that means if my boss decides to give me a bonus because I’ve worked hard, he should expect my performance to decrease.

I’m not sure I agree with that premise (if I did, I’m not sure I would want my boss to know).

Anik and Quoidbach proceed to promote a different kind of bonus program — “Provide [employees] the same bonuses with one caveat: they must be spent on pro-social actions towards charities and co-workers.”

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