Do your rewards motivate or else!

During one of my conversation with a CEO of a start-up company the discussion turned towards Compensation Planning to motivate employees, especially the talented ones. It was agreed that the most talented ones need a continuous motivation to maintain their momentum. During the discussion, the CEO narrated one of his bad experiences about one of his talented employees, whom he admired, wanted to reward, motivate and compensate appropriately.

Tom worked with John, the CEO of the company, and was a very talented employee who worked diligently. John being happy with the Tom’s work, rewarded him with a cash prize of $ 1000 (which was a significant amount ), in anticipation that Tom will be motivated to perform better. He also had lots of plans for Tom in the back of his mind. Both Tom and John seemed happy and thought that they did a good job.

Contrary to John’s belief Tom submitted his resignation within a much shorter span. During his exit interview, Tom did not state any specific reason for his resignation too (although, it was found later that he left for a better compensation package). His resignation came as a shock to John, who was genuinely interested in retaining good employees and did all what he could do to ensure it.

‘Where was the mistake?’, questioned the CEO to himself and to me too.
As I did not know much about the employee, it was inappropriate for me to come to any conclusion. But the question always remained behind the back of my mind. I always believed that it had something to do with appropriate compensation planning and rewards.

Here is a relevant a research paper by Rick Garlick, Ph.D., Director of Consulting and Strategic Implementation, Maritz Research titled ‘Individual Differences in Reward Practices‘.

The objective of this research was to find out what motivates different employees and to define some general categories of employees with specific reward or compensation aspirations. Here is an abstract of the research.

While everyone understands intuitively that we are not all motivated equally by the same rewards, you might not know it by the way many companies manage their incentive programs. Many times, human resource managers assume that what is rewarding to them will be rewarding to others as well, which may be a false presumption.

As Maritz Inc. was interested in understanding how the workforce is segmented on its reward preferences, it conducted an online Maritz® Poll of 1,003 North Americans. An analysis of participants’ recognition preferences identified six distinct reward profiles, along with some of the more common characteristics of people that were most likely to fall within each ‘reward’ segment.

Reward Profiles

Awards Seekers (22% of the general population, rounded to the nearest whole number): Awards Seekers want incentives that have both monetary and trophy value. These individuals are highly motivated by gift cards and travel awards. Awards Seekers also place higher value than most others on status awards. They are far less motivated by things that might take time away from their normal routines such as the opportunity to mentor other employees, the opportunity to work with people outside their own area, or the opportunity to take on particularly challenging new projects.

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