Forget bonus culture and use behavioural science to boost employee motivation, says new CIPD report

Reward specialists and HR professionals could significantly increase employee motivation with a better understanding of the science behind the impact of pay and reward on employee behaviour. That's according to new research by the CIPD, the professional body for HR and people development.

The report, ‘Show me the money! The Behavioural Science of Reward’, discusses how money may not be the straightforward workplace motivator we expect, and highlights how alternative approaches to reward may be more effective in increasing employees’ intrinsic motivation to succeed. By evolving the reward structure, organisations can take more control over the complex array of factors that determine their employees’ motivation and effectively enhance their business success.

According to the CIPD’s report, employees’ perceptions of rewards are defined by the circumstances in which they are received. For example, a bonus received during tough economic times will be perceived as having much greater value than the same reward given in times of prosperity. On the other hand, a bonus may be perceived as having less value if the recipient considers their own performance to be stronger than other employees who receive the same amount as part of a team reward. Given the tendency of people to overestimate their own abilities when performing familiar tasks such as those at work, reward and HR professionals need to be particularly wary of promoting a performance-based pay scheme to avoid disillusionment if employees’ rewards don’t match their expectations.

Jonny Gifford, Research Adviser at the CIPD, comments: “These are interesting and challenging times for reward specialists. We need to recognise employees when they go the extra mile and add increased value, but there are a number of behavioural factors that should be considered when shaping a reward programme. Crucially, we must acknowledge that monetary rewards aren’t everything and that they can even distort people’s motivation. For example, enticing the workforce with financial incentives and a strong bonus culture can lead to unwanted, risky and even unethical behaviours. Equally, because we tend to overestimate our ability as individuals, many if not most people find performance-based pay attractive in the first instance, but ultimately disappointing and demotivating. The key is having a flexible reward package that takes into account behavioural nuances and doesn’t rely solely on a wad of cash as the only means to motivate staff. It’s a change in direction for many but should also be welcome news for organisations who, in a challenging economic context, need to be more creative with their rewards package.”

The report suggests that alternative rewards can build intrinsic motivation among employees. It notes that recognition through appropriate symbolic awards – for example, through employee award schemes or discretionary ad-hoc gifts from line managers – are consistent with a workforce whose desire to succeed is self-sustaining, rather than driven by a desire to earn more money. These rewards also have the added benefit of being cost-effective and easy for businesses to disperse at ad-hoc moments, rather than building up to a single moment of reward in any given year.

Time and timeliness are key aspects explored in the CIPD’s report. It references a study by Zedelius and colleagues* which found that when people were promised reward for a later task, they started to perform better at intermediate tasks, even when those weren’t subject to a reward. It also explores the difference in perception between instant gratification and rewards that are of equal value but deferred, such as pension contributions. This difference is starkest among the youngest workers, who place the least value on pension contributions and other benefits deferred to later life.

Charles Cotton, Performance and Reward Adviser at the CIPD, comments: “Workplace pension schemes boost employee pay packets by thousands of pounds over the course of their employment but without the instant gratification of seeing that money land in their bank accounts each month, many employees fail to value the schemes. When it comes to reward, it’s important that businesses regularly reinforce the total value of the package that they offer to individuals and pay equal attention to both short and long-term rewards. This can include communication and education, but should form part of a well-thought out financial wellbeing strategy.”

With such a range of factors in play, the report concludes that the best reward strategies take into account both individual and group success, while not being overly complicated. By rewarding people for their individual performance as well as their contribution to a specific team or the overall company’s success, a business is most likely to see improved engagement, enhanced performance and good citizenship behaviours.

*Zedelius, C, Veilung, H, Custers, R., Bijleveld, E, Chiew, K and Aarts, H. (2014) A new perspective on human reward research: How consciously and unconsciously perceived reward information influences performance (Cognitive and Affective Behavioural Neurosicence. Vol, 14, pp493-508.) To download the full report, click here

1 in 4 of us have an ongoing difficult relationship at work, finds CIPD report

• 02 Apr 2015

 

Managers can avoid workplace ‘fracas’ by diffusing tension early on

New research from the CIPD, the professional body for HR and people development, highlights that one in three UK employees (38%) have experienced some form oif interpersonal conflict at work in the last year – this includes one in four (29%) who have had isolated disputes or clashes and a further one in four (28%) who report ongoing difficult relationships. The CIPD is warning that mangers have a key role to play in diffusing tensions early on as workplace conflict can have a major impact on employee wellbeing and  business outcomes, with as many as one in ten employees leaving their organisation as a result.

The report, Getting Under the Skin of Workplace Conflict, found that conflict manifests itself in a number of ways at work, the most frequently cited one being lack of respect, according to 61% of respondents. Alarmingly, one in every 25 respondents who had experienced conflict at work in the last year, said that they had experienced the threat of or actual physical assault at work. The CIPD is urging employers to build a business culture that supports positive working relationships and channels which mean that any workplace conflicts can be dealt with early on before it escalates and becomes unmanageable.

When conflict does arise at work, it’s most often perceived as being with line managers or other superiors (36%) rather than with direct reports (10%), highlighting the important influence of the power balance in how conflict is experienced. In other words, the junior person in the relationship is more likely to identify the issue as a problem, while the senior person either didn’t identify it as a problem in the first place or sees it as having been resolved.  The most common cause of conflict is a clash of personality or working style (44%) rather than a conflict of interest as such. Individual performance competence and target setting are also among the issues most likely to spark conflict, with promotions or contractual terms of employment being less influential.

The report found that there is a clear power differential at play with employees being most likely to perceive a lack of respect, bullying or harassment from their boss or other superiors and as many as 1 in 4 said that their line manager actively creates conflict.

Jonny Gifford, Research Adviser at the CIPD, comments:  “All too often, employers brush workplace conflict aside, putting it down to a difference of opinion. but it’s clear that it has a serious impact on our working relationships, wellbeing and productivity. Line managers have a crucial role to play here. For the most part they are seen as a positive influence in helping to create strong, healthy team relationships, but there’s still a clear case for developing managers and providing them with the skills they need. We need managers who can both build robust teams, where challenges can be made in a non-threatening way, and nip conflict in the bud before it has the chance to escalate. These are not generally seen as part of a core skills set for line managers and that view needs to change.”

The CIPD’s report found that in some instances, conflict has become unworkable, resulting in one in ten people leaving a role either by moving to a another role in the organisation, resigning or being dismissed. There are other impacts as well; individuals feeling stressed is the most common one, followed by a drop in commitment or motivation. One in seven cases, (14%) said that there had been a drop in productivity and in 6% of cases, stress levels escalated to a point where an individual went off work sick.

Gifford continues: “Both ongoing difficult relationships and isolated incidents at work can have major ramifications for employees’ personal wellbeing and morale and serious implications for the organisations through demotivation, absence, and employee churn, not to mention the time it can take management and HR to resolve disputes.

With one in ten people leaving their role as a result of it and one in seven saying it affects their productivity, interpersonal conflict is something that no business can ignore.”

When it comes to dealing with conflict, the most common approach tends to be informal, with individuals discussing the matter with their manager, HR or Personnel team, or the other person involved. We also look to our friends and family for support and advice – women are twice as likely as men to do this – but this does not seem to bear any relation to how well the conflict is resolved.

The CIPD has the following advice on tackling conflict management in the workplace:

More scope for mediation: In the CIPD’s survey just 1.5% of employees who had experienced conflict used mediation as a tool to resolve interpersonal conflict but 46% of employees surveyed overall thought that it was an effective approach to dealing with workplace conflict and more than one in ten (13%) felt that they personally had had a relationship that would have benefitted from mediation. This points to an unmet demand for alternative forms of dispute resolution (ADR). Line management matters: Line managers have a key role to play in creating good working relationships at work and would benefit from particular training on managing and resolving conflict within the team as well as understanding how they need to protect their team in conflict situations resulting from external influences, e.g. suppliers, the general public if in public-facing roles, etc. Develop a suite of options for conflict resolution: While the survey supports the value of more informal approaches to resolving conflict, it also confirms the importance of having formal grievance and discipline procedures. However, in some cases, such as in conflict rooted in personality differences, they do not seem to help. Employers should therefore provide a range of options to help resolve different types of conflict.