Money and motivation

It has been repeatedly proved that money is only one of the possible motivators (and probably not the best one).Nevertheless, it would be good to increase our people’s motivation when giving them bonuses.


Let’s think what we can do?

• Give all people almost the same bonus, only differentiating them slightly
• Reward the best and leave the rest
• Distribute the money on the basis of the Gauss curve
• Should we give bonuses to people involved in a project which is still in progress or only when the project is completed? What about very long projects? (2 years)
• Should we give all the money only if the project was 100% successful, and only smaller bonuses if the project was e.g. delayed.
• Should the bonus amount depend on the commitment and performance? How do we measure them?
• What is the minimum size of the bonus which still motivates people to work better? Is 5% of a month salary once in a year enough to motivate?

Of course there is no simple answer. It always depends…
What does an individual engineer think about the bonuses he or she receives? This depends on his/her particular situation and expectations and cannot be generalized.
What does a group of people (team) think about the bonuses? It depends on the overall atmosphere in the organization and common engineers’ expectations of the management. Needless to say we never have enough money to satisfy everyone, but the point is how many people will be disappointed.
What do we usually do?
The standard way is to create some KPIs to measure the performance. Then based on them, use a sophisticated methodology (not to miss anybody) to calculate bonuses for all team members. Another option is to give most of the money to well known “best performers”.
A few weak points…

• Local Stars creation – An engineer, who saved the project by fixing a critical error at a crucial moment surely deserves a bonus. We remember him very well. But what if the problem was known to him, yet not fixed earlier? Maybe our “star” is rather an idler who doesn’t control his working area. It may happen that we have more “stars” like this in our team. Should we reward them by giving bonuses?
• A different example is an engineer who always does his job well performing even difficult or unpopular tasks without complaint and creating a very low amount of new problems. Usually we do not pay attention to such a person, and do not remember about him at the time of giving bonuses. Our incentive system should be able to reward and motivate such people as well.
• Another problem is a difference in competences and/or commitment between engineers. There are people who can quickly solve even a very difficult issue, but are not fully committed to the project. (in matrix organizations some engineers can be involved in several projects simultaneously).There are also people who engage in the project 200% and are ready to work overtime, but their real effectiveness is rather low. How will our system deal with such cases?

How do we get money to motivate people to work efficiently? (Of course, keeping in mind that money isn’t the best motivator)
In my opinion one of the most important things is not to create complicated and formal incentive systems.
People tend to calculate, how much money they should get in each project. This means heading for disappointment after they check their bank account. People may also (unconsciously) tend to manipulate their key performance indicators to get better bonuses.
The truth is that when evaluating engineers we usually rely on our own observations and subjective opinions. Even a sophisticated incentive system with many KPIs usually needs to be “adjusted” manually by the management because not all aspects of work can be precisely measured.
If so, maybe it is better to make it clear from that the final decision is always at our discretion.
Bonuses should also be adjusted to general expectations of engineers in our organization. It should not happen that people are given high bonuses while all projects are delayed, or conversely, that bonuses are much lower than expected even though all projects have been developed on time.
Bonuses should not only reflect individual engineers’ commitment but also a wider context of their work as well as personal expectations. It is good to talk with all team members separately and to give them opportunity to present their success and describe their involvement and expectations. Such information can allow us to better fit the incentive to the employee.
Of course it is not possible to make everyone happy and there will always be some unhappy engineers. Our task is to make this group as small as possible and motivate the potentially unhappy by using other motivation techniques.
Trying to motivate people with money alone is a quick road to failure.