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Kon Stoilas


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Link between financial staff rewards and business performance


Can anyone find any research to suggest/prove that by giving staff financial rewards (either bonuses/salary increases) for increased individual performace will lead to increased business performance.

How can we measure that by giving staff greater financial incentives for achieving better performance the company will be better off?

4 Responses

  1. Financial rewards driving performance – not as far as I know

    Hi Kstoilas

    Although not directly answering your question, most of the research I’ve seen would suggest that financial rewards including base salary and bonus do not appear to drive performance, motivate or engage to the degree many would hope.

    One source would be the work of the Minneapolis Gas company who conducted reasech involving 40,000 employees between 1945 and 1965.

    The following link gives futher info about this and other research.

    The Corporate Leadership Council might be a further source of info if your organization is a member.

    The Sears Roebuck company did some research a few years ago that linked employee satisfaction with customer satisfaction and then to company results.  This seems to reinforce the case that it’s not (just) about financial rewards.

  2. No…..but some research that suggests an alternative approach..

    "A study, published in 1999 by Kenneth Kovach of George Mason University, compared associates’* ranking of what they wanted from their jobs with what their bosses thought was important to the associates. The results of the study were somewhat surprising.

    At the top of the associates’ list was interesting work, followed by appreciation of work, a feeling of being “in on things”, job security, and good wages, in that order.

    Employers thought good wages, job security, promotion/growth, good working conditions, and interesting work were most important to their staff.

    Motivating people can be challenging because associates are individuals, meaning what works for one, may not work for another. Managers must be able to communicate with associates.

    According to Kovach, managers sometimes disregard the most important motivational techniques when dealing with associates.


    Managers often think monetary incentives are the best way to motivate associates, but more often than not non-monetary incentives are best.


    Kovach’s survey provides good ideas for motivational opportunities.

    Two key managerial points emerge from Kovachs work: what associates most want from their jobs can be easily be addressed by their supervisors and are relatively inexpensive to implement.

    This is in sharp contrast to wages, job security, and promotion which are usually under the control of top-level managers.It is also a good idea to consider career development and where people are in their careers when thinking about rewards and recognition. Incentives can be both monetary and non-monetary."



    The term "associates" simply means staff…it obviously includes managers who are managed by other managers and is used to try to avoid the "management v workers" approach.


    I hope this helps

    Rus Slater

  3. finance and performance

    It’s a bit like the holy grail – people would like to find a link, but can’t.  There’s too much in the way of a direct impact between one individual’s remuneration and increased performance.  And there’s a surprising range of people who agree, from Daniel Pink’s book Drive (easy read) to much more dense (as in reading) academics.  

    There’s a great deal of evidence stacking up against money as a motivator – have a look at Deci and Ryan’s Self Determination Theory (SDT) and more recent studies – particularly by economists.

    It might be of course that organisations are willing to pay for research which concludes that financial incentives (in short supply) are not key to worker motivation.  We ran a mindstretch(R) session on this last year; have a look at some of the notes. 

    — Karen, fe3 consulting

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Kon Stoilas

L&D/OD/HR Consultant

Read more from Kon Stoilas

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