• Managing people

Employee Motivation: Compensation Vs Challenge

How employees can be motivated by more than money and benefits


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When managers think about motivating employees, the knee-jerk reaction is to think about the money, believing employees are only interested in the payslip and health benefit. They rarely thinking more deeply about of the barriers to the motivation, as evidenced in numerous interviews conducted by Professor Ayelet Fishbach of University of Chicago Booth School of Business. As a result, managers limit themselves in finding solutions to motivation.

Managers mistakenly believe that, although they have to provide both intrinsic (e.g. the love of a challenge) and extrinsic (compensation) motivations, employees are only extrinsically motivated. To best motivate their employees, managers need to look beyond the traditional external motivations such as bonuses and find ways to make the work challenging and interesting.

Motivation can be divided into two dimensions: outcome-focused and process-focused. With outcome-focused motivation, people are driven by the desire of an achievement. They want to finish the task so that the task is done. They want a finished report in hand and ready to be submitted; they want the presentation to be written and delivered. Outcome-focused motivation is about the destination. 

In contrast, process-focused motivation is about the journey. In this case, people are motivated by the enjoyment of the process. The challenge of an assignment is a motivation in itself, although the ultimate goal is to finish the assignment. Some people go to the gym because they are motivated to lose 15 pounds: an outcome. Others go to the gym because they enjoy the feeling of exercise and effort; they might hope to lose 15 pounds as a result, but their enjoyment is in the process itself.

Research shows that outcome-focused motivation stems from extrinsic rewards — a bonus for reaching a performance goal, for example. Process-focused motivation, on the other hand, is often driven by intrinsic rewards, such as the pleasure or excitement of learning new words in a new language. Process-focused motivation is also driven by means-focused motivation, in which the ‘how’ it’s done is all-important. Those who enjoy exercising don’t just go through the motions. They will push themselves and take the greatest pleasure from having a hard workout — from doing it ‘right’. 

Understanding the different dimensions of motivation — outcome-focused vs. process-focused — and how they might manifest themselves in someone’s behaviour or thinking is key to developing solutions for motivating people. Unfortunately, this research shows that too many managers don’t take this into consideration as they believe that employees are only interested in extrinsic motivation: specifically, compensation. 

In short, to motivate people:

  • Look for intrinsic motivators.Make the work challenging and fun. That doesn’t mean help employees to ‘play’. The fun must be directed toward objectives.
  • Reward the journey. To help people set challenging goals for themselves, don’t evaluate them by how much they have achieved their goals, but rather by how much they’ve done. Goals are meant to push people to do more, to stretch themselves. If employees know that their evaluations will depend on how well they’ve met their goals, then strategically they will set themselves lower goals so they can be ensured that they will meet them.
  • Slice big tasks into smaller chunks.Motivation ebbs and flows during a task — strong at the beginning; it weakens in the middle, and then surges toward the finish line. By ‘chunking’ large tasks into smaller pieces, the beginning and end surges are repeated each time — keeping people moving forward at a faster, more productive pace. 

Read the research paper: How to Measure Motivation: A Guide for the Experimental Social Psychologist. Maferima Touré-Tillery & Ayelet Fishbach. Social and Personality Psychology Compass

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