By Mirjam Neelen
What do employees need to truly strive to for performance improvement?
I actually regret asking the question in the first place because when I started my quest to find an answer, I felt that I had opened up a can of worms. Someone could write their PhD thesis on this (and that someone won’t be me).
Let’s assume – for now – that we live in a perfect world and that the goals of our organisation and our own individual performance goals are perfectly aligned (don’t laugh). Then what do we, as employees, need in order to “go for it”?
Looking at studies on performance improvement for individual employees, there seem to be certain performance drivers, such as employee engagement (e.g. Markos and Sridevi., 2010, Gruman and Saks, 2011), intrinsic motivation (Cerasoli, Nicklin, & Ford, 2014), extrinsic incentives (Condly, Clark, & Stolovich., 2003), and recognition (Luthans, 2000).
First, I looked at employee engagement because it became clear to me that we can consider the other drivers of performance improvement to be part of employee engagement. However, I quickly hit a brick wall. There’s a lot of controversy with regards to the definition of employee engagement. Gruman and Saks (2011) say that “there are numerous definitions of the construct, but that they all agree that employee engagement is desirable, has an organisational purpose, and has both psychological and behavioral facets in that it involves energy, enthusiasm, and focussed effort” (p.125). Not really a good definition, let alone an “operationalisable” one. Markos and Sridevi (2010) list various definitions, agree that we need a clear one, but leave it at that. They also state that we need dimensions of employee engagement in order to be able to measure it. As they say: “what you can’t measure, you can’t manage” (p.91).
So, with regards to employee engagement I left feeling quite empty handed. After all, it’s basically impossible to understand the impact of employee engagement if there’s no consensus on what engagement actually is. So let’s move on to some other, hopefully more usable, performance drivers. Perhaps intrinsic motivation and extrinsic incentives can shine more light on the question on what employees need to strive to improve their performance.
Cerasoli and colleagues (2014) carried out a meta-analysis of 40 years of research on the question of whether providing extrinsic incentives eats away at intrinsic motivation. The authors explain that extrinsic motivation is directed by the prospect of “instrumental gain and loss”. In other words, this type of motivation is driven by external incentives such as promotions, grades, awards, health benefits, praise, recognition, and so forth. In contrast, intrinsic motivation is driven by “internal” rewards. To put in in very simple terms, it means to be engaged for its very own sake because it feels good or right.
Cerasoli et al’s analysis shows that people perform relatively well when they’re enjoying something. They also found that if extrinsic incentives are present but only indirectly relate to performance (e.g., one’s base salary), intrinsic motivation better predicts performance than extrinsic incentives. So, to what extent you like a task better predicts your performance than your monthly salary. However, and now it gets interesting, when incentives are directly related to your performance, for example sales commission, intrinsic motivation is a poorer predictor of performance. So, you don’t necessarily need to like to sell the stuff that you’re selling. You can do fine, as long as you’re getting your commission. Last but not least, everyone seems to like incentives because they always boost the link between intrinsic motivation and performance. This effect was again stronger when incentives were directly related to performance.
We’re not there yet. It gets more complicated (but hey, we’re a complicated species). The researchers also found that “intrinsic motivation mattered more for quality than extrinsic incentives and extrinsic incentives explained more of the variance in quantity performance criteria than did intrinsic motivation” (p. 17). This basically means that, if we get a bonus of some sort we’ll deliver more but not necessarily better stuff.
While Cerasoli et al looked at individual performance, Condly, Clark, and Stolovich (2003) looked at teams. They evaluated 45 studies on the use of financial incentives specifically to improve performance. Their analysis shows that team-focussed incentives, where the team is rewarded for increased performance, had way more impact on performance than individual-focussed incentives. The authors explain this phenomenon through Bandura’s research on social loafing. Bandura basically says that some individuals will put in less effort into team performance when they know they will be assessed as individuals. The idea is that this social loafing can be eliminated almost completely by giving incentives to the team instead of the individual, while still assessing the individual on their own performance. I like that idea somehow.
After looking at employee engagement, intrinsic motivation and extrinsic incentives, what’s left is recognition. Luthans (2000) states that employees experience a pat on the back as a meaningful incentive. Some “pat on the back” examples are a manager:
- personally congratulating an employee for a job well done.
- writing a personal note for good performance.
- publicly recognising an employee for good performance.
- holding morale-building meetings to celebrate successes.
The first three, à la, the fourth one, really? Are there people out there who feel sincerely recognised through these events? I know I don’t. Honestly, I usually find them to be one big charade. But my prickly character might play a role in that.
So? Where are we?
Employee engagement is out for now. Not well defined, not sure what it means, no idea how to measure it. The other thing – no surprise really – is that we can conclude that highly intrinsically motivated people perform quite well. Forgive me for wondering what causes these people to be so highly intrinsically motivated? Could it be their strong performance perhaps? The fact that they experience success? Just asking.
Also, we all seem to like extrinsic incentives because they generally strengthen the link between intrinsic motivation and performance. This is especially the case if that extrinsic incentive is directly related to performance (sales commission type of stuff). Keep in mind that extrinsic incentives only predict performance better than intrinsic motivation if the extrinsic incentive is directly related to performance. Team-focussed financial incentives outperform individual ones (I actually love this one. Long live team work!). And, last but not least keep patting those backs to boost that performance (morale events where CEOs perform their favourite Michael Jackson act not required if you ask me)!
Cerasoli, C.P., Nicklin, J.M., Ford, M.T., (2014). Intrinsic Motivation and Extrinsic Incentives Jointly Predict Performance: A 40-Year Meta-Analysis. Psychological Bulletin. http://dx.doi.org/10.1037/a0035661. Retrieved from http://unotes.hartford.edu/announcements/images/2014_03_04_Cerasoli_and_Nicklin_publish_in_Psychological_Bulletin_.pdf
Condly, S.J., Clark, R.E., & Stolovitch, H.D., (2003). The Effects of Incentives on Workplace Performance: A Meta-analytic Review of Research Studies. Performance Improvement Quarterly, 16(3) p. 46-63. Retrieved from http://snowfly.com/wp-content/uploads/pdf/Vol16_03_46condly.pdf
Gruman, J.A., & Saks., A.M., (2011). Performance management and employee engagement. Human Resource Management Review, 21, p. 123-136. Retrieved from http://scholar.google.com/scholar_url?url=http://www.academia.edu/download/44319646/1-s2.0-S1053482210000409-main.pdf&hl=en&sa=X&scisig=AAGBfm39sUOlOY05ugUiPcuPO-lVDcECMQ&nossl=1&oi=scholarr
Luthans, K., (2000). Recognition: A Powerful but often Overlooked Leadership Tool to Improve Employee Performance. The Journal of Leadership Studies, 7, p. 31-39. Retrieved from http://jlo.sagepub.com/content/7/1/31.full.pdf.
Markos, S., & Sridevi, M.S., (2010). Employee Engagement: The Key to Improving Performance. International Journal of Business and Management, (5) 12, p. 89-96. Retrieved from http://www.ccsenet.org/journal/index.php/ijbm/article/viewFile/6745/6332