Inspiring rewards

Not all rewards are equal

There’s a common misconception that people will work harder to earn cash than anything else. If you ask, they will even say cash is more appealing. (In behavioral economics, this is known as preference reversal or the say/do gap – people will say one thing for appearances but actually do the opposite because of habits and behavior.) It’s also what is at the heart of the inspiration vs. compensation incentive debate. When it comes to rewards, what we say we want and what really inspires us to reach our goals and drive results are two different things.

The trouble with money

Money is great for essential things like salaries, sales compensation and commissions. These are the table stakes to get people to show up for work every day. But when it comes to inspiring performance above and beyond the status quo, you’d need a lot of money to actually make a difference. Why? Financial rewards put people into a calculative mindset. They ask, “How much money is it? Is it a good deal for me to exert more effort, learn a new skill, work harder, etc.?” If it’s a lot of money, the answer is yes. If it’s not, they’ll continue with business-as-usual, exhibiting no behavior change as a result of the incentive or reward.

What inspires people to perform?

Developed by Dr. Ran Kivetz, a professor at the Columbia Graduate School of Business, this model summarizes it best. Inspiring rewards are more effective at changing behavior than cash and cash equivalents (debit cards, gift cards, etc.). When you are asking employees or salespeople to change their behavior or work towards a bigger goal, they’re not going to do it for money that will likely be used for their next tank of gas or grocery run. They need to be inspired by something they desire or would not normally spend their own money on – and it’s different for everyone. Some crave experiences and travel; others want to splurge on a high-end brand or a gift for someone they love. Whatever it is, we can help.

Salary and incentive compensation are the basic costs to get people to show up for work every day. But compensation alone is not the best solution for:

• Inspiring employees to embrace your organization’s mission, vision and values
• Creating self-motivated brand ambassadors for your company
• Motivating employees to go above and beyond their expected baseline of performance
• Giving your best performers reasons to stay

In other words, if you’re looking to inspire your employees, sales teams, customers or channel partners to do more and stay longer, money will only get you so far. Cash satisfies their basic needs but it doesn’t inspire them.