Cash bonuses ineffective for motivating staff

There's good news if budgets are tight: financial bonuses pale in comparison to other tactics when it comes to motivating employees

Cash bonuses ineffective for motivating staff

Looking to motivate your staff this holiday season? Then put away the company wallet. New research shows bonuses are not the best way to encourage employees.

A study from the Institute of Leadership and Management (ILM) found that just 13% of employees are driven to work harder by the prospect of a pay-out, indicating organisations should switch focus towards creating a more enjoyable working environment.

Emotional factors such as job enjoyment, getting along with colleagues and being treated well by management are the most effective ways to motivate staff. Pay is still relevant, however, with 49% of those surveyed indicating a good basic salary was important.

Of more than 1,000 employees surveyed, 59% rated job enjoyment the most effective motivator, followed by getting along with colleagues (42%) and being treated fairly by their manager (22%).

Alongside bonuses, flexible working arrangements (16%) and opportunities for promotion (9%) rated poorly for encouraging staff to try harder in their role.

ILM chief executive, Charles Elvin, said the results showed that understanding employees and what makes them tick is vital in having a happy and motivated workforce.

“This report is telling us there are far more effective, and cost-effective, ways to motivate people. These include giving regular feedback, allowing people to have autonomy in a role, the opportunity to innovate and improved office environments,” he said.

“What this also shows us is that having good managers is paramount in business, as they are key staff motivators who can make a real difference to their teams. It reinforces that you can never really overdo what we call the ‘five fundamentals’ of good management: coaching, giving feedback, listening, rewarding and recognising success and performance management."

Elvin added that something as basic as hearing ‘great work on that report’ can be a real boost to an employee’s confidence and deliver a sense of pride and satisfaction.

The research also revealed that workers tend to fall into one of four employee archetypes, which have different motivation factors and reward mechanisms. They are:

Career climbers

They are more likely to be under 35 and hard workers. They are most interested in training, development and career prospects.

Sociable workers

These workers are likely to be on a below average salary, work hard, enjoy their job and have respect for their manager. They are most interested in getting on well with their colleagues.

Financially focused

Those with money as number one priority are likely to be male and working full time. They rate getting on with colleagues and enjoying job as less important than money. According to the survey men chose base salary and benefits (58%) as the most important motivational factor, while woman ranked it third (41%). Financially focused employees are most interested in performance related bonuses and financial rewards.


These workers are most likely to have been with their employer for  an above average length of time, more qualified than the average employee and get on well their manager. Other archetypes often change into flexi-workers later in their career. They are most interested in being able to work flexibly or from home and have varied start and finish times.

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