Is it better to get money or appreciation?

In theory there are two instruments that a reasonable manager can use with their staff (given that lashings with the cat-o’-ninetails are no longer in vogue); you can offer monetary incentives in the form of bonuses or you can communicate appreciation. The question has been whether either of these two approaches works in terms of improving job performance and whether they complement each other or perhaps works against each other. This was the conundrum that was aimed to be answered in a new study.

It seems that money can't buy performance from employees unless it is combined with appreciation.

In the study subjects were given the task to electronically acquire data for a research project. The task was simple but required a degree of attention and care. All subjects were paid a base amount but one group received an additional performance-based monetary bonus. Within both groups two sub-groups were formed and in each instance one sub-group was informed the purpose of their task, that their work was appreciated, and that their work would have positive impacts. The other groups were not communicated with.

The results showed that some appreciative words were accompanied by a 20 per cent improvement in performance and a 40 per cent reduction in errors but only if they were in tandem with a performance based payment. However, a performance based payment alone without appreciative encouragement actually led to decreased performance and more errors.

It seems that money can’t buy performance from employees unless it is combined with appreciation. The message for all employers and managers out there is pay your people well and let them know you value what you do for the company. After all, we all need to feel the love.