How Incentives are Changing to Keep Existing Staff Motivated
By James Houran Managing Director, AETHOS Consulting Group | March 04, 2012
Human Resources (HR) in hospitality is critically vulnerable right now. Compdata Surveys analyzed 2010 voluntary and involuntary turnover rates by industry for over 4,000 companies across the U.S. alone. The hospitality industry showed the highest rates for both voluntary (24.1%) and total turnover (37.9%). In fact, both of these figures are double the next highest rate in the survey. Natural attrition and turnover of low performing staff is one thing, but more than ever hospitality companies are challenged to keep their high performers motivated with the proper incentives. The trouble is that the concept of "proper" incentives is a thorny issue and one that is constantly evolving.
Financial incentives in the workplace
No one works for free, nor should they. Money is the traditional incentive and pay-for-performance models continue to be the industry standard for many categories of employee. Yet many employers confuse money with motivation. This confusion can lead to an imprecise and ineffective understanding of the power of financial incentives in the workplace. For instance, Alfie Kohn's 2009 work Why Incentive Plans Cannot Work argues that incentives are essentially bribes and that they fail because they only succeed in gaining an employee's temporary compliance. Kohn further suggests that incentives do not motivate – they punish; they rupture workplace relationships; they ignore reasons; they discourage risk taking; and they undermine interest. These are legitimate concerns, but Kohn presents the questionable assertion that the failure of incentive plans reflects an inadequacy of the psychological assumptions that ground such plans.
Broadly consistent with Kohn's findings, many studies show that a materialistic focus in life is associated with a lower psychological well-being. However, the psychology of money and motivation has important nuances, and Kohn's concerns may therefore pertain primarily to specific types of individuals. For example, a 2001 study published in the Journal of Personality and Social Psychology found that the motives that drive one to focus on money are more relevant than the intensity of the focus itself. Positive motives involve using money for basic necessities and as a measure of achievement. Negative motives refer to using money to gain power or superiority over others or in an attempt to allay one's self-doubt. When the significant negative correlation between subjective well-being and money importance was analyzed while controlling for the influence of motivation, the correlation lost its statistical significance. In addition, when calculated independently, the relationship between negative motives and money importance was both negative and statistically significant. As a result, the researchers attributed the correlation between psychological well-being and money importance to negative motives alone. This suggests that not all motives for wanting money lead to decreased happiness. Their findings suggest that it is not the importance of money that contributes to well-being; rather attempting to use money to alleviate self-doubt and increase self-esteem leads to problems. They add that such motives become problematic when money is used for things it cannot provide, e.g., self-esteem, happiness and genuine friendship.
Pursuing money for negative motives can lead to a poorer psychological well-being, but this is not the same as pursuing money to provide security and comfort for oneself and family. Obviously, employees want to earn fair wages, and employers want their workers to feel that is exactly what they are getting. To that end, it is logical that employees and employers alike view money as the fundamental incentive for satisfactory job performance.
Putting money in its place