October 20, 2015

It Is Not Money Alone that Motivates Employees

Motivating communication with employees helps keep their performance high
and the error rate low. (Photo: KIT)

(October 20, 2015)  According to an Experimental Study with about 140 Participants, Employees Perform and Work Better, if Financial Incentives Are Accompanied by Motivating Words

Small signals of appreciation have a decisive influence on the output and quality of the work of employees. A field experiment of KIT economist Petra Nieken and two colleagues revealed that a combination of performance-oriented piece wage and motivating words increases the performance by 20% and reduces the error rate by 40%.

“Our results are relevant to entrepreneurial practice,” Nieken emphasizes. She holds the Chair for Human Resources Management of KIT’s Institute of Management. How can staff members be motivated? Theory lists two instruments: Financial incentives, such as bonuses or piece wages, and the capability of executives to motivate their staff members. The question whether and how these two instruments complement, strengthen or weaken each other, however, is not clearly answered by theory. That is why this question was in the focus of the study performed at Bonn University.

In the field experiment, 139 students were given the task to electronically acquire data for a research project. Data acquisition was simple, but required a certain degree of attention and care. The test persons were all paid the same basic salary, but one group received an additional, but small performance-dependent piece wage. Every salary group was divided into two partial groups. The test persons of one group were informed in a few sentences prior to work about the purpose of their task and they were told that their work was appreciated and that their work results would have positive impacts.

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