Ellen Warden, SPHR
WorkPlace Synergy, LLC
Atlanta, GA

Does a compensation plan that includes hefty bonuses make a strong employee perform even better? It seems logical, but a recent study suggests otherwise. Amy Wrzesniewski, professor of organizational behavior at Yale University, and Barry Schwartz, professor of psychology at Swarthmore College, found that those driven by a combination of motivations don’t perform as well as those who have only high internal motivation.

According to the researchers, there are two types of motivation: internal and instrumental. Internal motivation comes from within. People are motivated to do something based on the feeling of satisfaction they derive simply from doing it. They’re the employees who come to work every day because they simply love what they do.

Instrumental (sometimes called “extrinsic”) motivation is the result of wanting some type of external reward. Maybe the person picks a profession because of the compensation that comes with it or some type of reward or bonus that is put in place to bring about a certain behavior or result.

Surely two motives should be more powerful and effective than a single one.  The research actually suggests that different types of motives to achieve a specific result sometimes compete; and in fact, instrumental motives can weaken internal motives.

Based on the results of this study, the authors suggest “efforts should be made to structure activities so that instrumental consequences do not become motives. Helping people focus on the meaning and impact of their work, rather than on, say, the financial returns it will bring, may be the best way to improve not only the quality of their work but also—counterintuitive though it may seem—their financial success.”

How do you help your people focus on the purpose and impact of the work they do?

  • Start with your clients. What impact are you having on your clients? What need are you meeting for them? What are they gaining from what you are doing?
  • Take time to give employees regular feedback and constructive criticism.  Communicate how your employees’ contributions are helping your firm succeed.
  • Provide challenging assignments and give employees leeway to make decisions about how they approach projects. This sense of control creates ownership in the project, and employees are motivated to succeed by a desire to step up to the challenge.
  • Demonstrate a clear path to career advancement.  Mentor and offer the opportunity for professional development. 
  • Encourage participation in corporate decision making.  Foster a sense of camaraderie as well as a stake in the success of the company. This will help employees view themselves as valued members of the collective team, and that their intellect and input is noticed and appreciated.

Daniel Pink in his book Drive talks about compensation not being a top motivator for most people. He argues that you need to pay people fairly so they can provide adequately for themselves and their families, but other factors are more important to motivation at work.

BV professionals must believe that they are compensated adequately and equitably for their contribution to the success of the firm.  But once that sense of fairness is established, the carrot of increasing salary, bonuses, benefits and perks will not be enough to keep internally motivated employees engaged and productive. 

Make it a goal to find and retain people with strong internal motivation.  Instill a sense of purpose and meaningfulness.  Your employees will have a vested interest in your firm and will be motivated to contribute to its success, and therefore, to their own success.

Ellen Warden works with BV practices to recalibrate comp and incentive structures, identify retention solutions, coach leaders on employee relations challenges and flashpoints, and develop management strategies to drive performance and engagement. For more information, go to WorkPlace Synergy.

Ellen Warden
Ellen Warden