Employee Engagement

What it is, and why it matters for you


 

Definition:

Employee engagement refers to the overall sense of enthusiasm, loyalty, and commitment employees feel working at a given company. Organizations with this strong trait have plenty of employees who come to work every day ready to give it their all and who are committed to contributing to the company mission. These employees will put in discretionary effort due to the genuine engagement with their work.

A Definition: 

Employee engagement refers to the overall sense of enthusiasm, loyalty, and commitment employees feel working at a given company. Organizations with this strong trait have plenty of employees who come to work every day ready to give it their all and who are committed to contributing to the company mission. These employees will put in discretionary effort due to the genuine engagement with their work.

Throughout this page, we will work to help you define your unique engaging ideas, ways to increase it, the benefits found from engaging, and the science involved in the process!

Three Major Components

There are many different interpretations of this term. Our interpretation, however, includes several key components.

3 focuses f Definition Venn Diagram

1. Relationships

There's a good reason why Preciate's purpose is helping people build stronger relationships. Connections with others directly feeds human happiness, and there's no exception when it comes to workplace relationships.

Having strong relationships with coworkers is fundamental for teams and organizations to thrive. It's the connections with other people in the office who create a sense of loyalty to a particular company. Once someone has built authentic relationships with their teammates, they are more likely to want to keep their job. This leads to increased retention for the organization.

2. Recognition

Giving and receiving recognition is one of the most important components of employee participation. In annual engagement surveys by TINYPulse, the percentage of employees who reported feeling valued at work has gone down year after year.

When it comes to feeling undervalued, a lack of appreciation is to blame. Many companies fail to implement a recognition program that encourages the exchange of appreciation and praise, which ends up costing them in the end. Employees who receive consistent, authentic recognition for their effort and accomplishments are more productive, more loyal, and generally happier. Not only do they feel good coming to work, but they take those good vibes home, improving their lives overall.

3. Company Culture

Without considering the company culture, increasing the focus of our study would be nearly impossible. The environment an employee comes into every day has a huge impact on their ability to be genuinely engaged with their work.

Company cultures can be negative or positive, so creating a positive culture takes conscious effort. In particular, it's a matter of creating a culture of appreciation where strong workplace relationships can thrive.

When a company's culture is clearly defined, employees can easily determine where they fit in. This increases engagement because employees know how they are contributing to their organizations' purpose. It also helps with branding and recruitment, which has become more important in modern times. Companies with a well-defined positive culture tend to attract hard-working, dedicated employees, which perpetuates the cycle of engagement.

Remember: This topic and the whole piece of content refers to the level of enthusiasm, commitment, and productivity in a company's employees. 

Business Team Holding Thumbs up

There are many components that contribute to this area of discussion, and some of the most important are company culture, relationships, and recognition. With a focus in these three areas, organizations can take themselves to the next level, benefitting customers, shareholders, and employees alike.

 

People Working with Laptops and Phones

 

The Three Key Components 

  • Relationships

  • Recognition

  • Company Culture


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Emotional Rewards are the Key to Employee Engagement

"Companies that broaden their focus beyond delivery of transactional rewards will reap the benefits of a more engaged and productive workforce. . . Employers must offer emotional rewards." 

- Mercer: Global Talent Trends Study, 2019.

 

Who can utilize and harness the benefits of connecting and engaging with employees?

It turns out members across entire organizations can benefit from implementing these techniques. Within this section we will detail a few different use-cases, users, examples and teams that reflect this focus.

Remote Teams

Having a significant number of your employees working remotely on any given day is the new normal, and for many managers, the management of people they can’t “drop in on” is somewhat of a puzzle.

At the same time, studies have shown that remote employees are, on the whole, happier and more productive than their in-house counterparts, so companies need to embrace effective strategies for keeping them engaged.

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1. Set a Recurring Morning Meeting

It’s very likely that you and your remote team will not have done a significant amount of work before 9 a.m., but that doesn’t mean you shouldn’t schedule a meeting at the symbolic start of the workday. Every project and every action item should all be put on a calendar to ensure that everyone is on the same page. Setting clear expectations will help to avoid confusion and frustration.

2. Model Expectations

During your morning check-in with your team, review your own work to-do list for that day and ask them all to do the same. This gives your team the ability to make agile decisions about how to prioritize work and team up on projects, as well as reassuring each other about what it is that the rest of you actually do all day.

3. Make Contact Frequently

Reach out to remote workers frequently throughout the workday to make sure they feel involved. Respond to their calls and emails quickly, as they don’t have the ease of access that your in-house employees do. Engaging them often, even for just brief calls and check-ins, reminds them that their home office considers them equal members of the team.

4. Use Different Communication Tools

Using a few different channels for communication can also be helpful. Instead of sending an email for every request or question, explore collaboration tools and apps that enable quick, real-time response. It’ll feel less onerous and time-consuming than getting an email that requires a lengthy written response. For meetings, explore the use of video conferencing software, so that even when you’re not meeting in person, you’re still engaging face to face and reading each other’s facial expressions and body language.

Pretty young designer coworkers enjoying free time and raising togetherness and team spirit while sitting in a circle on the floor of the office and playing games with paper stickers on the forehead.
5. Build Culture with Technology

Some employers are encouraging the use of online hangouts like Google or Slack as a way for employees to tap into the hive mind, as well as to create a sort of digital water cooler. Real-time reactions to work, current events, or items of shared interest (some employers even pair up buddies based on similar values and encourage digital hangouts) can foster trust and strengthen workplace bonds.

And let's not forget the benefit of an employee recognition system. With remote teams especially, it's important to remind employees of their value, which helps keep them engaged and excited by the company mission.

6. Prioritize Facetime

Make your in-person time count. When you do meet with your remote workers, make sure that it feels like it’s worth their while to come into the office. Come prepared, and consider pairing the meetings with some sort of professional development or team building exercise.

7. Build Trust

Instead of keeping track if someone has been in their chair all day, consider if the deliverables have been met. As long as a remote team member is making their meetings and hitting their marks, they’ve earned your trust. Keep that trust flowing, and your payoff will be increased productivity.

 

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Remote working isn’t going away any time soon, and early adopters have helped define best practices that can guide managers in this new workplace environment. By taking a page from their playbook, managers of remote teams can reap the benefits of having a team that doesn’t need to take up space to create great work.

Disengaged Employees

For young people searching for jobs today, it’s almost impossible to avoid companies trying to lure them in with office perks like game rooms, massage chairs, and yoga classes. And all these things sound fantastic, especially when you’re fresh out of college dorms, where forty people are sharing three showers and you can hear your next-door neighbor snoring through the wall.

Silicon Valley is particularly notorious for providing employees with a swath of benefits and perks from free meals and snacks every day to in-house barber shops and dental offices. Companies like Facebook and Google draw in thousands of new employees, largely by offering an array of perks that appeal to the generations who have come to expect convenience and comfort.

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1. Critiques of Office Perk Programs

When you look more closely at these inflated perk programs, however, it is easy to see some of the points for critique. Perks like gyms and dry cleaners on company property can be seen as ways for an organization to encourage their employees to stay at work for as long as possible. The less they have to do outside of work, the more time they can spend inside, making money for the company. Facebook even provides free transportation for their full-time employees to and from their homes so they can spend the maximum amount of time working without having to worry about transportation schedules, broken down cars, or hours “wasted” commuting.

Although companies are creating these perks in order to increase motivation and productivity, they often have the opposite effect, creating employee disengagement. While an employee who works all the time could be seen as the ideal, the potential for burnout is real, which then leads to checked-out employees whose productivity and retention are decreased.

In contrast to Facebook and Google, companies like Slack place an emphasis on working hard while at the office but also going home at the end of the day to decompress and enjoy time to oneself outside of the work context. Not only do employees value time off in the form of sick days and paid parental leave, but they also benefit from a work environment that cultivates sustainable hard work. They have come to understand that the truly ideal employee is one who works efficiently and enjoys coming to work every day but who also leaves work at the end of the day without terror that having a life is an indication of a lack of devotion to getting ahead.

In addition to burnout, the reality is employees quickly come to view perks as entitlement programs. If certain perks become unsustainable for the company and get pulled back, the negative effect is profound and feels like a loss of privilege and recognition rather than a return to baseline. People are starting to realize that simply spending money on “cool stuff” can backfire, and if companies want to keep employees around, they need to ensure that “perks” are laser-focused on creating a sense of safety and belonging by lessening stress and building genuine relationships.

In her post on human wholeness, Ali Schultz writes about her experience working for a company that had stereotypically “cool” office perks like a keg, happy hours, and an ice cream truck that came once a week. Despite the reputation her company had for their fun workplace culture, there was a lack of wholeness and happiness that went undiscussed, even within the Human Resources department which claimed to put employee well-being at the forefront. Instead of stereotypical perks, she points to safety and belonging as fundamental to happiness and increasing employee motivation.

2. The Alternative

Perks without an emotionally-connecting purpose are not only valueless, they become detrimental. When the happy hour ceases to be attended by the most respected employees, it becomes synonymous with goofing off and attendance is seen as a negative. Similarly, when no one hangs out to eat ice cream, it’s just another expensive, unhealthy snack causing a mid-day distraction. 

Beer and ice cream are clearly not important for actual, sustainable job satisfaction and happy, engaged employees. Rather, they are an enticement to bring people together - the condiment at a meal of emotional connection. So go ahead and bring in the keg, but center the event around something other than Budweiser.

Make it about what the company is doing and how it is making the world a better place. Or have the ice cream truck come, but make it the side-show to the main event of recognizing the efforts and achievements of employees and teams of employees who are working, and succeeding, together.

 

  • Remote teams 

  • Disengaged employees 

  • All employees

     

All Employees

You’ve most likely heard the commonly-held belief that work life and personal life should be distinct and separate. Why should it matter if you enjoy being at work and interacting with your coworkers as long as you can go home and relax at the end of the day? Well, since happiness has become an increasingly popular area of scientific inquiry, more and more research has been produced demonstrating just how important basic happiness can be in many areas of our lives, including at work. 

Middle aged boss, mentor congratulating employee, shaking hand

We’ve all seen it; disengaged, unhappy coworkers tend to slack off while happy, engaged employees are willing to put in more effort throughout the workweek, proving how attention to happiness is one of the keys to growing a successful company where this culture thrives.

1. Components of Employee Happiness

In Annie McKee’s book How to Be Happy at Work: The Power of Purpose, Hope, and Friendship, McKee highlights three necessary components for an employee to be happy and satisfied at work.

1. See purpose and meaning in the work that they do
2. Have a hopeful vision of the future
3. Have resonant friendships/relationships in the workplace

During her research and interviews, McKee found that being able to connect to and confide in coworkers leads to greater employee satisfaction, which in turn motivates employees to work harder and contribute to their team’s efforts. While the author emphasized the detriments of being unhappy at work, she also highlighted how expensive perks don’t always buy long-term happiness and too often boomerang to become entitlement programs that are an albatross around the neck of the HR budget. While free soft drinks and massage chairs may make people “happy” in the short term, the salient question is do they facilitate an environment where real, meaningful, relationships flourish?

2. The Importance of Workplace Relationships for Employee Motivation and Engagement

An article by a Stanford Graduate School of Business professor, Jeffrey Pfeffer, also points to the importance of close relationships in maintaining happiness and positive employee morale at work. Pfeffer comments on how reward systems based solely on money tend to pit employees against each other and make it difficult for them to form an emotional connection with both their coworkers and the company vision as well. However, environments that layer in social connection into the rewards system, such as public recognition of a job well done, result in happier employees, which is beneficial for mental and physical health as well as employee retention.

As issues like workplace stress and employee disengagement are being reported at record levels, now is a critical time to analyze how we can change the work environment to be more conducive to happiness. Experts agree this maximizes productivity, after all.

While employees deserve to have a few “extras” and must be paid fairly, material incentives in the absence of a socially supportive environment will ultimately fail to produce sustained happiness. Furthermore, if social support is fundamental for employee happiness and well-being, then it makes sense for reward systems in the office to reinforce these ideas, publicly recognizing those who are contributing to a culture of hard work and appreciation in the office.

We all have the ability and indeed the responsibility to examine both the big initiatives we implement, as well as the small, everyday interactions we engage in, and whether we are promulgating an environment of entitlement and cut-throat competition or positive human connection.


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The Benefits of this Process

There are so many benefits to your organization once you begin to incorporate these tactics. Within this section, we will explore a few of them, their effects, and how to incorporate them into your day to day activities. 

  • Diversity & Inclusion

  • Peer-to-Peer Recognition

  • Workplace Culture

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diverse team cheer image of many hands

Diversity & Inclusion

Why this promotes diversity and inclusion.

two boys laying down on texas republic seal for peer to peer image

Recognition

The benefits of peer-to-peer recognition in the workplace.

workplace culture image of team playing games

Workplace Culture

How a positive workplace culture can affect your team.

  • Diversity & Inclusion
  • Peer-to-Peer Recognition
  • Workplace Culture

Each of these areas of focus are just a few factors that add to the benefits of this system. 

While we have chosen three main areas to focus on, it is important to note that each organization is unique and may have different and varying areas as well.

Why Workplace Recognition Promotes Diversity & Inclusion

Considering the frequency we hear the terms "diversity" and "inclusion" today, it's fair to say these concepts have made their way into mainstream conversation. No longer confined to the Human Resources department, workplace diversity and inclusion are becoming key topics when discussing an overarching business strategy.

Team Stacking Hands for diversity section

First, let's take a minute to lay out the difference between the two terms.

Ultimately, diversity is a metric; it points to the numbers making up the employee representation at a given organization. This means companies can mandate goals for diversity. For example, a CEO could require a hiring manager to bring in three new women to increase the percentage of female employees. This method of promoting diversity has become more popular in recent years following the results of research such as McKinsey & Company's, which showed the financial benefits of diverse perspectives in the office.

On the other hand, inclusion refers to the actual impact the workplace environment has on the employees. While a company could be reaching certain diversity numbers, they could still fall short of creating an inclusive work atmosphere where a diverse group of people feel comfortable and safe. Without safety or a sense of belonging, employees are less creative and less productive. 

So how does recognition promote inclusive workspaces for diverse employee perspectives?

Keep in mind how employee recognition comes in a variety of forms - from annual performance reviews to gift cards to "employee of the month" awards. However, not all recognition is created equal. Financial rewards can reduce long-term motivation and complicate the relationships between coworkers. And other forms of recognition like annual performance reviews lack key elements for lasting behavioral change such as timeliness, frequency, and visibility.

Recognition is the most impactful when it is:

1. Visible
2. Timely and frequent
3. Open for anyone to give or receive
4. Interactive
5. Specific
6. Measurable

Now, let's go over the reasons why recognition (when done right) is a key player in the promotion of diversity and inclusion in the office.

1. Recognition creates a sense of belonging

It can be hard to feel like you belong in an office setting, and this is especially true for minority identity groups. At the same time, many argue a sense of belonging is a basic human need for motivation, meaning everyone needs it to be successful. Without a sense of belonging, employee enthusiasm and retention can suffer. Therefore, it is crucial for organizations to create environments where diverse perspectives feel included.

In order to create belonging with recognition, it's important that recognition is being given and received by a diverse range of people. Rather than only hearing what top leadership positions have to say, the best program will allow for everyone to participate in the "Give-Get Cycle" of recognition. It's easy to get in the habit of recognizing the same people over and over again, but if everyone is able to contribute, there's a greater chance everyone will be recognized and grow their sense of belonging. In this way, recognition applications like Preciate honor the value of diverse contributions.

When done correctly, recognition helps people feel appreciated, valuable, and motivated to work towards a shared purpose. With a diverse group of people all being recognized and feeling like they belong, the workplace environment becomes an inclusive space where everyone is valued and engaged. 

2. Recognition encourages a culture of shared values

By implementing an employee recognition system, companies are able to encourage and support a particular office culture. Specifically, visible public recognition allows for reinforcement of desirable behaviors making up an office culture. It is far more powerful to reinforce social norms such as inclusivity and compassion, through social rewards like recognition than it is to do so with external, financial rewards like gift cards.

No matter what positive values are a core part of the company culture, the best recognition systems are effective at promoting continued progress towards shared values and goals. Because more and more companies are turning towards diversity and inclusion as shared values, it is crucial for them to utilize recognition to promote behaviors that best support diversity and inclusivity initiatives.

3. Recognition can be measured and used to encourage further progress

Although diversity is relatively easy to measure with demographic data collection, it's a lot harder to come up with ways of measuring inclusion. In addition, the way diversity is measured doesn't tell the whole contextualized story. 

With a modern recognition system, the organization can have access to a plethora of data related to engagement and appreciation. Digital tracking of recognition gives everyone real-time data that shows who is recognized and engaged and who is being left out. Now, it is possible to measure inclusion and other positive values in a variety of ways including seeing how many recognitions related to the company's values are being awarded. With Preciate, this can be done using core value stickers and corresponding reports. The data can then be used to show which areas need more work and which are thriving, allowing the organization to make the most insightful changes to its culture.

What does this mean for the future of workplace diversity?

With diversity and inclusion only growing in popularity, it's more important than ever to think about how recognition systems can be utilized to optimize the benefits that come from a diverse and inclusive workplace.

Some companies have already taken it to the next level, creating a top leadership position called the Chief Equality Officer. Although this maneuver can be commended for its innovation and forward-thinking nature, it isn't necessary for every company looking to promote a more inclusive work environment.

All it takes is starting the chain of recognition, and a culture of inclusivity and diversity will follow.

"Imagine this: imagine a place where people of all colors and all races are on, and climbing every rung of the corporate ladder; where those people feel safe -- indeed, expected -- to bring their unassimilated, authentic selves to work every day,    because the difference that they bring is both recognized and respected." - Janet Stovall, TEDTalk

 

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Rainbow image of water droplet signifying unity

 

Peer-to-Peer Recognition in the Workplace

Depending on where you work, the attitude towards recognition programs and engaging fully with your organization can range significantly. While some company leaders continue to believe that simply paying their employees is enough, a steady stream of modern research says otherwise.

Rather than financial incentives, it's appreciation and the intrinsic motivation that comes from it that leads to optimal team engagement and performance.

Let's jump into four of the most impactful benefits of peer-to-peer appreciation and what you can do to start getting those benefits today!

Canva - Businessman was given a thumbs-up and compliments from his boss who successfully worked.

1. Employee Engagement

First, and perhaps most importantly, peer-to-peer recognition has been repeatedly shown to make significant improvements in team engagement measurements.

Engagement is typically measured by surveying employees and having them self-select into three categories: engaged, disengaged, and actively disengaged. Depending on which category an employee falls into, the amount of passion and commitment they feel towards their job will differ, which in turn impacts the amount of effort they put in.

Recent research has uncovered current trends in this area, which are fairly uninspired. According to Gallup's extensive study called the "State of the American Workplace," a mere 13% of employees consider themselves engaged at work. With 64% disengaged and 24% actively disengaged, a lot of people across the country and likely the world are not feeling committed to their job and company and therefore are most likely not contributing as much as they could be.

When companies see these numbers and hear that implementing a recognition program can improve engagement, they might turn to something like annual performance reviews or work anniversary rewards. Peer-to-peer appreciation, however, has more far-reaching effects when it comes to getting people excited about their jobs. Receiving messages of gratitude from a variety of coworkers promotes an authentic sense of belonging, which feeds this sort of engagement. Managers should participate as well, but it's important for the entire company to have the chance to be involved in both the giving and receiving of recognition in order to get the most benefit.

2. Retention

Pretty much every company is looking to retain more of its employees. Not only is retention a reflection of company culture, but it has a big impact on the financials of an organization. The more good-quality, trained employees who leave, the more time and money the company has to spend replacing them. It's a big hassle that can often be prevented.

So how do you prevent employees from wanting to leave? Well, one of the best ways is to implement an employee recognition system. And not just any recognition system. A system that allows for peer-to-peer recognition can provide a unique opportunity to encourage the growth of workplace relationships throughout the organization.

Once employees have spent time giving and receiving recognition at your company, their loyalty will inherently go up as their relationships grow as well. While any other company offering an equivalent salary can immediately compete on that level, they can't replace the friendships that were built through many instances of appreciation.

3. Company Culture

Closely linked to the idea of employee retention is company culture. The better your company's culture is, the better your retention rate is bound to be. This is because company culture refers to the overall environment of the organization, which is a result of the company's purpose, core values, and subsequent actions.

Although many companies set out with the best intentions in terms of creating a positive emotional culture, the truth is that many fall short. Programs like annual performance reviews or even office perks that don't connect back to an emotionally-driven purpose typically end up with less meaningful change for the company. In fact, sometimes these types of programs can end up backfiring.

Peer-to-peer recognition takes an entirely different approach. By allowing employees to fully participate in a program based on social rewards, the culture naturally becomes one of gratitude and appreciation where more people feel that sense of belonging and unity.

Having a great company culture is a benefit not only to the employees but to the company leaders as well. Once a positive culture has been established, leaders can use their existing culture as a marketing tool for recruiting new talent. Many people, especially younger generations, want to work for companies that provide space for authentic recognition.

4. Happiness

Employee happiness, more commonly known as satisfaction, is not the same as our main focus, despite their overlaps.

Although an employee might be happy with their job, that doesn't mean they will feel engaged (aka committed and passionate). But you can't have engagement without happiness.

And how do you achieve better employee satisfaction? Unsurprisingly at this point, it's peer-to-peer appreciation. In Technology Advice's 2017 survey "State of Employee Satisfaction and Loyalty," researchers point out how one of the biggest areas for improvement right now is in regard to feedback for employees. Employees want more of it, but they don't want it coming from managers exclusively. Switching to a peer-to-peer recognition program makes more significant impacts in employee satisfaction and happiness, which in turn improves the ever-important focus of this entire page.

Putting the Pieces Together

From employee retention and performance to company culture and recruiting, these are just some of the benefits of implementing a peer-to-peer recognition program in the office.

While new generations of employees are changing the very nature of the workplace, companies have an opportunity to adapt in the best way possible.

When employees get to give and receive recognition, they will not only grow their own workplace relationships but also add value to the company at the same time.

Canva - Group of happy business people eating together in restaurant

 

Positive Emotional Workplace Culture

We’ve all had the life experience where a group activity is going smoothly and morale is high… up until that one person walks in with “negative energy.” It’s like the spell of positivity and efficiency is lifted, and negative emotions spread throughout the rest of the group. We can all be affected by a single person or small group of people who project their emotions onto the rest of the team, whether it be consciously or subconsciously.

As highly emotional animals, humans pick up on other peoples’ signals like body language and energy levels, and often their own experience will change as a result. This type of mimicry is called emotional contagion, and it can apply to positive emotions as well as negative ones. In both cases, emotional contagion has important implications when considering effective teamwork strategies and organizational culture in particular.

1. Benefits of a Positive Workplace Culture

While we can imagine the detrimental impacts of negative emotional contagion, one study found group members subjected to positive emotional contagion “experienced improved coordination, decreased conflict, and increased perceived task performance.” The researchers point out how these group members come from organizations that use recognition dinners and other ideas aligned with our main focus to purposefully create positive emotional contagion throughout their company.

Understanding how their employees are affected by the emotions of their coworkers and managers, some companies are choosing to use that tendency to their advantage by striving to create a positive emotional culture that sparks positive emotional contagion. Once the good vibes are flowing, employee recognition is a natural result, which then leads to increased motivation and more engagement from focused teams.

2. Cognitive vs. Emotional Culture

When you hear someone talk about work culture, most of the time they are talking about “cognitive culture” or the intellectual values and general guidelines for what is expected of employees. The other important side of company culture, however, is emotional culture. Because of emotional contagion, every company has an emotional culture. It’s up to management whether or not they consciously try to make it a positive emotional culture.

When emotions like anger and fear dominate the office atmosphere, performance and employee retention can suffer, resulting in disengaged employees. As one Harvard Business Review article discusses, even something like a list of rules on the wall can contribute to a culture of fear whereas decorative pictures of happy people engaging in social activities can play a part in a culture of joy.

3. Positive Workplace Culture and Recognition in Action

Author Karl Sun explores the culture of gratitude he fosters in his company, Lucid. He points out how leading by example is critical and therefore calls for leaders and management to push past any initial discomfort in order to jumpstart the gratitude culture.

In addition, Sun highlights keys when expressing gratitude to employees such as consistency, authenticity, specificity, and humility. Importantly, he considers how avenues for recognition and expression of gratitude need to be in use in order for employees to actually reap the benefits of a culture of gratitude, which include increased job satisfaction and health, both physical and mental. Once proper avenues are in place, members of the office can slow down long enough to remember who/what they are grateful for, and contribute to the positive emotional culture by recognizing coworkers in an inherently contagious way.

Creating a strong workplace culture where positivity can thrive is a key to perpetuating organizational success. The more coworkers engage in peer-to-peer recognition and other relationship-building activities, the happier they will be, continuing the cycle of emotional contagion. 


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Connecting with the Crew - The Science

There are so many variables within this area of study. We will spend some time on a few of them, helping foster further understanding of this subject, how to increase it within your organization, and how that will impact overall business operations.

1. Discretionary effort related to the science behind engagement

2. Employee performance related to the science behind engagement

3. Trust related to the science behind engagement

  • Encouraging Discretionary Effort
  • Employee Performance Myths
  • Building Trust
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Encouraging Discretionary Effort

Whenever this topic and performance comes up, it isn't long before people start talking about the concept of discretionary effort. A truly engaged employee will put in the discretionary effort when it comes to their career.

But what does discretionary effort mean? Discretionary effort refers to the amount of additional effort, beyond what is already expected, that an employee is willing to put into their work.

Canva - Close up cropped side profile view of three workers sitting in a row busy, typing on their laptops, dressed according to office dress code, focused and concentrated on success

Let's take a marketer who has been given a quota for delivering leads to sales. They could do the bare minimum to deliver what has been requested of them and still maintain their position and earn a fair salary. But without engagement, they are unlikely to go beyond this minimum and put in the discretionary (optional) effort. An engaged marketer, however, would be more willing to put in extra time to deliver additional leads or make sure their leads are the highest possible quality.

The extra effort is not only good for the company, but it is representative of a happier, more engaged employee. Let's get into what companies can do to encourage employees to put in discretionary effort.

1. Give appreciation

Some leaders still believe the most effective way to motivate employees to work harder is through fear tactics and punishment for missing targets. The research, however, does not support such a perspective. Fear tactics tend to alienate the people whom they are targeted at, creating a lack of security and community. They make people feel less empowered to make the behavioral changes necessary for personal growth.

In a workplace setting, it is important to understand the pitfalls of punishment in contrast to the benefits of recognition. Employees who are consistently given recognition for their work tend to feel more appreciated, leading to an improved sense of belonging. In one SHRM study, 54% of respondents agreed that employee recognition improves engagement with that employee, and 58% agreed it improves employee relationships as well.

With engagement comes discretionary effort, which in turn impacts the overall performance and productivity of the company. Get a recognition program in place at your company to optimize for both individual and organization success.a

2. Provide and inspire purpose

Giving employees appreciation tells them that they have a purpose at the organization. But what about the broader, company-wide purpose?

Communicating company purpose to employees can be an extremely valuable tool when it comes to increasing overall performance. Employees who have a firm grasp of their company's greater purpose can quickly determine where they fit in and how they can continue to propel the company toward its ultimate goals.

More and more companies are shifting towards a new way of doing business - one that puts the focus on purpose rather than profit alone. Preciate, among a growing number of companies, became a Certified B Corporation® in order to create an environment where purpose can thrive. Not only does this benefit the public, but it benefits the employees, providing inspiration through the potential for social impact.

No matter what a company's purpose is, clearly conveying it to employees is a great first step to engaging them and therefore encouraging discretionary effort.

3. Offer resources and support

It can be difficult to get anything done without the proper resources and support, let alone doing something new and challenging at work.

Imagine a salesperson who has been tasked with calling 100 contacts per day has been meeting her quota, but she feels held back by the outdated sales tool her company has been using for the past few years. Without the support of her manager, she would continue to meet the requirement for calling 100 contacts per day, but it's unlikely that she would go out of her way to make even more calls per day. 

Now imagine a salesperson who has a manager that offers additional support and resources to their team. They would see how their salespeople are being held back by the current tool and subsequently provide access to an updated tool that allows for increased efficiency. Suddenly, the employee who was held back by the outdated tool would be able to increase the number of calls she makes in a day.

By making the work experience better through resource support, companies get more employees who are willing to put in that discretionary effort.

4. Create a positive emotional culture

In addition to providing resources and support, companies can benefit from creating a positive emotional culture. In a positive company culture, the sales employee from the previous example would feel comfortable communicating with management, letting them know what is holding her back.

Creating a company culture where positivity can thrive is an important step in encouraging discretionary effort from employees. This is largely due to the concept of emotional contagion, which refers to the mimicry of human emotions in groups. If the culture is created by company leadership that's based around positive emotions like respect and gratitude in contrast to negative ones like fear and anger, then employees are more likely to feel welcomed, inspired, and happy to work hard.

5. Be a champion of a healthy work-life balance

With all this talk about discretionary effort, it's tempting to think that encouraging employees to work hard all the time would be another key way to inspire this additional effort. While it may work in the short term, the truth is that no employee can work all the time.

Instead of creating an environment where excessive work is rewarded, companies can encourage their employees to maintain a healthy work-life balance. This takes a conscious effort on the part of many companies, especially those in the United States considering the average length of time spent working per week compared to other countries around the world.

Although it may be counter-intuitive to some, a workforce with a healthy work-life balance is more likely to be happy, engaged, and willing to put in discretionary effort. Rather than getting burnt out from non-stop work and a lack of time for self-care and family time, employees need an environment where they can come to work refreshed and ready to give it 110%.

 

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In Your World

Getting employees to work harder takes more than just asking them to do so. Instead, the best way is to develop an authentic caring attitude towards their overall wellbeing.

From giving consistent messages of appreciation to offering additional resources and support, team leaders can increase their employees' engagement and therefore their performance.

Preciate's employee recognition platform is focused on relationship building for this precise reason. Workplace relationships are a key contributor to company culture and overall employee happiness. Start encouraging discretionary effort from employees today by launching a recognition program and inspiring a culture of appreciation.

 

  • Discretionary Effort - For Companies and Employees

  • Employee Performance- 3 myths

  • Building Trust

 

Employee Performance

In a rising trend, many Fortune 500 companies have bid adieu to the performance review, deeming it an outdated way to check in with employees.

Adobe, GE, and many others have instead moved towards a system of more regular one-on-one check-ins with employees, where they examine their work around specific projects and progress towards development goals.

“It’s liberating people,” says Donna Morris, senior vice president of global people resources at Adobe. “It has really helped to create teamwork instead of individualism, which is critical in a creative company.”

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Performance reviews reinforce the notion of a tiered system at work, where managers are ranked higher than employees, thereby putting up blocks to effective and trusting communication as peers on a team. We’re glad they’re being replaced by something more useful and less fraught with anxiety for all concerned.

Below are just a few performance measurement myths we think have no place in the modern workplace.

Myth #1: The numbers speak for themselves

Quantitative measurements of productivity aren’t always an indicator of an employee’s value unless there is a direct correlation to performance. For example, in sales, activity-based measurements are important. How many phone calls a day you make or how many clients you speak with does, in the end, create more coverage for the company and leads to more sales. And in professions where hours are billed, like law, the number of hours you bill is directly related to the firm’s success.

However, for other professions productivity at work is the culmination of knowledge and creativity, collaboration and determination, not the speed with which an employee churns out a number of projects. For some companies, rather than collecting data on productivity, they’re turning to a new review process called 360-degree feedback. In this new process, feedback is given by employees’ team members, across the organization. Managers then look for trends in how an employee is perceived, both negative and positive. GE found success with this system when they moved away from yearly performance reviews and instead co-opted regular “touchpoints.” During these touchpoints, they spend more time talking about forward-looking development and suggestions can come from anyone in an employee’s network.

Myth #2: Previous successes or failures dictate future performance

Walt Disney lost a job because he wasn’t creative enough. Steve Jobs was dumped from his own company. JK Rowling was a single mom receiving government assistance before she wrote her world-changing books and became one of the richest women in the world. Missing the mark is not an accurate reflection of someone’s value, as a team of researchers at HBR discovered when they analyzed the performance data of a large US corporation over a six-year time period.

Researchers reviewed both the scores and the associated employment outcomes at the company. Their findings? Only a third of the high-performing employees maintained their performance year after year. And for those that received a poor review one year, they did not demonstrate consistent poor performance. The bottom line is that the majority of employees are continually learning and developing. When a company invests in their growth and development, they’re more likely to retain engaged, high-value employees.

Myth #3: Save it for the review

There’s an outdated notion that if you have an issue that needs to be addressed with an employee, and there’s a review coming up on the calendar, that you can table the discussion for that later, more formal setting. But, in this way, a laundry list of complaints can pile up and an employee can feel attacked over numerous incidents that happened weeks or months ago. It’s always best to address an issue in the moment so that the context is clear to all concerned and it’s resolved quickly.

And if you’re hoping to wait until the next performance review before giving that deserving employee a raise, guess again: there’s a pretty high chance they will have moved on to another company if you wait too long to reward them. A new generation of employees needs more real-time gratification in the form of feedback and compensation.

Fostering an open and ongoing dialogue with employees, where time is spent focusing on goals, rather than reviewing past work, is a welcome replacement to the antiquated annual review. The companies at the forefront of this growing movement are building happier, more cohesive, and more productive workplaces.

Company employees working in office

 

Building Trust

Most of us are familiar with differing priorities among departments in an office and how that can impact the inner workings of a company. While management is more focused on developing practices that increase productivity and profit, Human Resources is often dedicated to employee well-being. Michael and Toby’s tumultuous relationship in the hit TV sitcom The Office demonstrates this dichotomy perfectly; it’s one we have seen time and again. 

It isn’t without reason that this parody exists. Oftentimes, new managerial practices can have trade-offs that are detrimental to certain aspects of employee well-being, whether it be psychological, physical, or social well-being. Rather than argue one set of priorities is more important than another, it’s more important to recognize that happiness, health, and human relationships are related, and their optimization leads to better overall outcomes for company success.

1. Health Impacts of Improved Employee Well-Being

Overwhelmingly, recent research points to the positive impacts of improving employee well-being for both health and long-term company sustainability. In one study published in the Academy of Management, researchers point out how an emphasis on improved well-being can lessen stress, which in turn has positive effects on physical health such as lowering the risk of cardiovascular disease and high blood pressure. There is even evidence that says this lowered stress can decrease the presence of immunological diseases as well as decrease the number of emergency room visits per employee.

For a management team that is looking to optimize productivity and profit, it is certainly worth considering the amount of time employees lose to illness. The less time spent going to doctors' appointments and dealing with symptoms like fatigue and pain, the more time an employee can spend doing quality work - and enjoy doing it at the same time!

2. Employee Happiness, Trust, & Retention

In addition to physical health, the study found a link between psychological well-being, or mental health, and an office focus on employee happiness. When organizations fail to provide an environment where employees can be happy, it’s not just job satisfaction that suffers, it’s performance and retention as well. Though it’s difficult to know what actually happens behind closed doors, articles like those in The Atlantic and the NY Times cite Amazon as the “offender du jour” with example after example of an environment so stressful, with benchmarks set so high, that the company is becoming veritably synonymous in the press with emotional misery and consequently, turnover.

The organization’s devotion to speed and efficiency at the expense of emotional support and well-being is actually celebrated within its ranks. This situation is not confined to the warehouse environment, we are told, but pervasive throughout the organization. As a result, the company's trustworthiness has diminished over time, both internally and in its public image. No one can argue that Amazon has been the powerhouse of the last 5 to 7 years, but the cracks are starting to show and it will be interesting to see how long it will last when 97% of millennials are reported to read Glass Door reviews before even considering interviewing with a company.  

Employee Well-Being in Action

In contrast, Harvard Business Review reports how organizations like Zappos and DropBox, known for their focus on employee happiness and well-being, see fewer mental health concerns such as depression and anxiety among its workforce. As discussed in our blog post on the three essential components for employee happiness, there are several things an organization can do in order to provide a positive environment conducive to happiness, arguably the most important of which is an emphasis on building strong, resonant relationships between co-workers.

Zappos and DropBox’s creative, positive, and fun workplace environments are attracting the best and the brightest from around the country as we usher in the next generation of workers who are no longer slaves to material achievement but very consciously will forgo financial profit for emotional stability. From quarterly activities like bowling and hiking to public employee recognition and encouragement systems, these companies are benefiting greatly from the increased job satisfaction and engagement.

The difference between Zappos and Drop Box’s approaches is how they spend money, time, and effort on managerial practices that intentionally foster positive interactions between coworkers, which in turn leads to social well-being and both psychological and physical health. Mark Heid, in his recent Time Magazine article, asserts that close friends are as, if not more important for our health than choosing to exercise daily or even refrain from tobacco.

Those with strong social circles tend to be much healthier than those who are socially isolated, which supports why work practices that encourage strong interpersonal relationships lead to healthier employees. With a focus in improving employee well-being, benefits like happiness, retention, and productivity will lead to an overarching sense of trust that the company cares about more than just profit.

Company success and sustainability are not the most important things in life. But even if they were, the interesting thing is how the path to achieve them are stronger, deeper relationships, which are the most important things in life.


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Engaging by Cultivating Work Relationships 

The people we work with have an enormous impact on our lives, both personally and professionally. So it’s no wonder that within the professional ecosystem, we manage different types of relationships that benefit us and our work in different ways.

A Gallup poll on the state of the American workplace found that close friendships at work have an immediate and tangible impact, “When employees possess a deep sense of affiliation with their team members, they are driven to take positive actions that benefit the business.”

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There are plenty of apps to help us stay superficially connected to our community, both at work and in our personal lives. But building trust and friendship requires thoughtfulness and emotional honesty that can only be found in real life.

So, while it’s a fantastic feeling when you can make friends easily at work, sometimes your workplace relationships require a bit more intention.

1. The Mentor

If you’ve never asked a higher-up at your company if you can spend some time in close proximity observing how they work, what are you waiting for? Even if your company doesn’t have an official mentoring program, identify someone you admire and put out the ask. You can also request one-on-one check-ins, and most executives will be happy to pass on knowledge in a work setting. Drew Jones, a senior producer at National Geographic, speaks highly of his company’s mentoring program. He remembers asking to shadow an Executive Producer about 8 years ago. “It was so great to learn from him,” says Jones. And now he participates on the other side of the program.

2. The Protégé

“We meet every other week to chat,” Jones says of his mentee, “and I bring him along to sit in on some editing and post-production work.” In the future, if Jones needs to delegate part of a project, he’ll have someone at the ready who’s been training as his eyes and ears and knows how he works and communicates. The same Gallup poll on the American workplace also found that the most effective form of management in today’s workplace is coaching. Helping another employee find their strengths and hit their stride is one of the best investments you can make in your extended team. Noticing and complimenting the accomplishments of those coming up in the business helps to create a motivating environment for all.

3. Friendly Rival

This relationship may be the trickiest to manage, especially when it comes to your own emotions, but it may yield a big payoff. Think of that co-worker who always shows up to meetings slightly more prepared than you or who always stays cool under pressure. If you reframe their presence from “always making me look bad” to “always pushing me to do better” then perhaps the Rafael Nadal to your Roger Federer will push you to win a couple of Grand Slams of your own. As Nadal once said, “If anyone says I am better than Roger, then he doesn’t know anything about tennis.” Now, that’s not being afraid to recognize someone else’s greatness! This relationship works best when a company embraces a culture of support and giving credit, and moves away from a model where co-workers bad mouth each other.

5. Work Spouse

It’s the little things: bringing coffee the way you like it, checking in to see how a particularly tricky project is going, reminding you to get out for some fresh air. A “work spouse” is a friend who offers social-emotional support and can feel the most nourishing on a day-to-day basis. They provide the work “ying” to your “yang” (kind of like Ron and Leslie on Parks and Recreation). Just remember to keep your interactions at work positive and don’t constantly vent to one another.

Put a bit of thought into the types of workplace relationships you cultivate to make the most of your social interactions at work. And if you’re a manager, take steps to foster friendship-friendly workplace culture. It will strengthen your co-workers’ desire and ability to do good work together.

 

Employee Recognition in the Workplace 

As we know, employee recognition is one of the most important areas to keep up within the workplace; it can help with many companies' greatest concerns such as diversity and inclusion and employee motivation. 

Despite the essential nature of recognition, it is also not an urgent task and therefore tends to get forgotten during busy or otherwise stressful times.

When you know you need to send recognition but don't have time or just can't think of what to say, check out one of these common workplace recognition topics. Get inspired, go forth, and share the good vibes!

1. Recognition for Hard Work

Let industrious employees know how much you appreciate them. Use one of these examples:

1. Your results speak for themselves. You put in the hard work, and you succeed as a result.
2. The pride you take in your work inspires us all to work harder and do better.
3. Your dedication to seeing everything through to the finish is incomparable and made the difference in getting us to the finish line.
4. You bring energy and passion to even the most mundane of projects and tasks and the whole group benefits as a result.
5. I never cease to be impressed by your work and your work ethic. Thank you for the leadership you provide within the team through your example.

2. Recognition for Achievements

Employees in your workplace with stellar performance? Recognize them with one of these ideas.

1. You are a winner and I love being along for the ride! I knew that you could do it. A big congratulations on graduating. I can’t wait to see what you’ll do next!
2. I knew you would get the certification! I know a lot of work went into “making it look easy.”
3. Congratulations on passing - and the first time too! You inspire me and the whole department with your dedication to pushing forward.
4. I saw you putting in the extra hours and now they have paid off with this promotion. You showed that getting to the top is not done in an elevator but by climbing all the steps.
5. Congratulations on being recognized by management!

3. Recognition for Presentations

Presentations can be nerve-wracking! Use one of these examples to praise employee presenters. 

1. The presentation was spot-on! The client loved it and your work really made the whole company look good. Thank you for the hard work that went into not just the content but rehearsing to ensure that the delivery was perfect.
2. You totally crushed it! The presentation was an unqualified success. I know you put in the hours and it shows.
3. You burned the midnight oil to pull that presentation together and the results speak for themselves.
4. You have more than earned this opportunity and you demonstrated it in the meeting. You utterly commanded that room. I felt proud to be part of your team!
5. You put in the two things that this presentation needed to succeed - time and attention to detail. Then you went in front of a less-than-friendly crowd and nailed it. Way to go!

4. Recognition for Sales

Have a sales team in need of some appreciation? Here are some ideas to jumpstart their motivation.

1. You have a unique ability to identify and capitalize on an opportunity. Congrats on the sale!
2. Congratulations on blasting through your numbers for the quarter. I’m not surprised, but I have to admit, I’m still impressed!
3. Nice job landing the account! I know you’ve been working on it for months, and your hard work and perseverance paid off. The client loves you and it shows.
4. Your numbers inspire us all! 
5. Your insight was spot on and the client obviously agreed. Thanks for sealing the deal.

team high fiving after closing a deal

5. Recognition for Teamwork

Looking to keep your team's morale up with recognition? Try one of these examples.

1. Your ability to work well with absolutely everyone is a very rare quality, and I am grateful that you chose to work with us and bring that to the company. 
2. I can’t believe how fortunate I am to work with you. I always know that you will have my back and any part of the job you handle will be a success.
3. Way to make an impression on the team with your incredible work ethic and ability to bring them all together!
4.Having you on the team makes a huge difference. We all know we can get there with your support.
5. It’s amazing how you are always available to get others and especially new employees up to speed.

6. Recognition for Kindness

Trying to grow your workplace friendships? Connect with one of these 5 recognition ideas.

1. Thanks so much for making me feel better today. You’re a great coworker (and cheerleader.)
2. You consistently go the extra mile for not just work but your co-workers. It’s impressive and inspiring.
3. I count myself lucky to work in an office with such a caring person. You’re simply the best!
4. Thanks so much for covering for me when my wife had surgery. It meant the world to me to be there for her while not worrying about what was going on back at work.
5. Thanks for letting them know what I did for the project. You didn’t have to share the credit, but you generously did and I am very grateful for it.

7. Recognition for a Mentor

Want to recognize your boss or other work mentors? Use these 5 examples to get inspired.

1. Thank you for creating a positive environment within our department. 
2. I’m always impressed how you treat the team with such high respect. This makes us all rise to the occasion because we know we are valued, so we want to bring our very best.
3. Your healthy perspective on what is truly important inspires all of us.
4. You don’t just support us in work - you make us feel like we matter. It’s hard to find that quality in anyone, let alone a manager!
5. As a leader you make us all feel secure, but as a person, you make us all feel understood. The combination makes you truly exceptional.

103-examples-of-workplace-recognition

 

5 Transformative Team Activities and Trends

Saying ‘thank you’ will never go out of style. But when technological innovations seem to make us feel more isolated instead of more connected, how can we turn these simple ‘thank you's’ into ongoing, interactive moments that foster community building?

Already, companies are making it a priority to answer this question, and as they do, they are discovering that employee engagement can be a transformative force. We’ve identified five awesome ideas that show how organizations are using empathy and appreciation to drive workplace culture and empower one another.

1. TGI….any day of the week!

Yes, we all look forward to Fridays with its gateway to the weekend. But, establishing an engaging mid-week routine can give employees something additional to look forward to that involves participation. Austin product design consultancy Argodesign uses Thursdays to host a company-wide event called Snäk. During this time, employees indulge in a tasty treat and socialize, but each person also has the opportunity to theme the Snäk to their liking or have it coincide with a presentation, project, or experience they’d like to share with the company. By using this weekly meeting to simultaneously reward and encourage employee engagement, Argodesign facilitates relationship-building and fosters feelings of support.

2. Grow you

A company that truly believes in each employee’s potential will support their professional growth and encourage exploration. KLEOS Microfinance Group, a non-profit organization combating poverty through development programs, makes educational resources available through an eLearning program. As long as employees are motivated, they can further their own professional growth. And because KLEOS is interested in long-term success for employees, they encourage their employees to learn important business and entrepreneurial skills. When companies provide the tools for their employees to learn and grow, it reveals an effective employee engagement strategy where there's a strong sense of support.

3. To be healthy is to be happy

Some employees have difficulty fitting proper diet and exercise into their week. And when work is prioritized over physical and mental health, it can be a recipe for disaster. Reebok has made it a priority to ensure their employees have plenty of on-site opportunities to achieve their optimal health and therefore their optimal happiness. The company makes it easy for their employees to lead a healthy and active lifestyle by hosting activities consisting of yoga, dancing, hiking, and even a CrossFit Box open throughout every week. Investing in the well-being of your employees, especially when they may not have the ability to do so for themselves, displays real compassion.

4. Preciate each other

It doesn’t take a grand gesture or reward to let someone know they’ve done a job well done. In fact, sometimes it’s the simplest interactions that can be the most meaningful. That’s why we believe in a new way to build stronger relationships with those around you. The Preciate app allows our users to recognize one another using contextual badges as awards. As users accumulate badges over time, they gain a portable record of good. In the fast-paced business world, people often forget to stop and express gratitude towards one another. While these lost moments may seem insignificant, when recognized, they can actually evoke individual confidence, assurance, and happiness. It’s tools like Preciate that remind us how kindness, communication, and appreciation strengthen human connections. And as luckily for us, kindness is contagious.

5. Happiness wins

An internal team with a mission to heighten happiness in the workplace might be the most surefire way to make every employee feel as if “employee appreciation day” is every day. Video conferencing solution company Zoom has made such an open, significant effort to develop a happy work environment that a self-started and self-managed team emerged within the company. They refer to themselves as the “Happiness Crew”. The Happiness Crew’s sole mission is to spread joy, and they do so through activities like Zoom Roulette (a virtual water cooler), volunteer days, and office get-togethers. Through their collaboration and creativity with employee engagement activities, they have seamlessly integrated appreciation into workplace culture. The result? Zoom was just announced as one of 2018’s Best Places to Work as rated by employees.

Why Financial Employee Incentive Programs Can Reduce Motivation

Whether it be in the office or at school, people tend to think financial incentives would make them and their team work harder. If only they could get paid directly for putting in that extra effort, and perhaps their overall motivation and performance would improve as a result. And sometimes, especially when the reward is big enough, that is what happens. The opportunity to earn more money for improved performance presents itself, and thus, performance improves.

The plot twist, however, is due to the extrinsic nature of financial incentives. For example, if a manager handed out gift cards as rewards for good behavior, then the department will be largely motivated by something outside of themselves. Often, they become dependent on these incentives to do something that would otherwise be expected and completed using internal or intrinsic motivation

1. The Theory
Let's take a look at an important theory behind employee motivation: motivation crowding theory.

Bruno S. Frey is an economist and researcher who wrote extensively on the topic of motivation crowding theory and specifically on the “crowding-out effect.” The concept describes a phenomenon where offering financial rewards leads to decreased motivation and reduced performance due to the “crowding-out” of intrinsic motivation by extrinsic motivating factors.

When this idea was first argued by Titmuss in his 1970 book The Gift Relationship, there was a general lack of empirical evidence backing up his theoretical yet quickly popular position. Since then, however, there have been a considerable number of studies looking at the crowding-out effect that demonstrates the actual impact of financial incentives on behavior modification.

2. The Evidence
Motivation crowding theory has a plethora of supporting evidence. 

Today, there is more empirical evidence gathered on motivation crowding theory and examples of crowding-out than can ever be discussed in a single article. The crowding-out of intrinsic motivation can be seen nearly everywhere, from academic achievements to volunteer work.

One study by Levitt, List, and Sadoff (2016) looked at motivation crowding in an academic context by paying high school freshman in Chicago for meeting a certain achievement standard based on grades, attendance, and need for disciplinary actions such as suspension. They had two research groups, one who received a $50 monthly reward for reaching the standard and another who was entered in a monthly lottery to win $500 (with a 10% chance of winning) if the standard was achieved. In both treatments, it was only the students on the border of success or failure who were significantly impacted by the financial incentive.

Though the short-term results show these students’ improved performance, by the time they reached their junior and senior years in high school, the motivation was no longer there. Therefore, graduation rates were unaffected. The payment program was only in place for the eight months making up the freshman year, and by the end of the sophomore year, any detectable performance improvements were gone. Ultimately, this demonstrates the short-term nature of extrinsic motivation from financial incentives, in particular once the incentive has been removed.

In an office context, the crowding-out effect could quickly become a company-wide issue. Financial rewards might seem to motivate some employees in the short term, but what happens when the HR budget changes or an employee who has gotten used to monetary rewards doesn’t meet the standards one month?

The expected result, based on research evidence, is the intrinsic motivation an employee has to work hard and meet company goals will have been crowded out by the extrinsic motivation provided by extra money. Very quickly, the lack of financial incentives can feel like a punishment. Employees might struggle to connect with the piece of themselves that makes going to work feel meaningful, contributing to their willingness to put in discretionary effort.

3. The Solution
Move away from financial employee incentive programs to promote intrinsic motivation and create happy teams.

As Levit, List, and Sadoff discuss in their paper, there’s no questioning the value of growing human capital, a fundamental part of any company’s continued success. The key, however, lies in the way organizational bodies like schools and businesses try to enhance human capital by molding behaviors and improving performance. Many organizations still hold on to financial incentives, hoping they will motivate employees and modify behaviors, thus adding economic value via human capital. But as the research demonstrates, these employee reward programs tend to backfire.

In their last sentence, the researchers argue “we believe interventions aimed at building human capital in ways that allow for individualization hold the greatest promise.” Because financial rewards are not the most effective employee incentive program, it's time to push forward and implement ways to support an individual’s intrinsic motivation such as through employee appreciation.

From sharing encouraging recognitions to highlighting the company purpose, it’s more important than ever to focus on workplace relationships and making others feel appreciated so they can sustain motivation, happiness, and success throughout their career. 


 
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