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A Cost-Free Incentive to Motivate Employees

03/30/2015 03:17 pm ET | Updated May 30, 2015

What is the best way for a manager to motivate employees? The traditional answer would be to give them a cash bonus, but studies have shown that cash bonuses are becoming less effective. The practice has become so common that most employees now expect it - it's just a part of their salary expectation.

That isn't to say that organisations should stop giving bonuses - it would be the equivalent of a pay-cut by today's standards, which is a guaranteed de-motivator. So how do managers provide a new motivator without cutting further into their organisations budget?

The simple answer is through giving praise. Although all of us like to be recognised for a job well done, managers often underestimate how effective praise can be as a motivator. MRI scans have shown that receiving praise triggers the same regions of the brain as receiving a cash bonus - which means it can motivate people in a similar way. Praising your employees doesn't carry the same expectation as a cash bonus, but it does make your employees feel good about their work, which can be a strong motivator.

The Wrong Way

However, there are lots of mistakes that managers can make when giving praise. For example, trying to mix praise with constructive criticism will greatly undermine its effectiveness. This is because people have a strong bias towards remembering negative things, so in the long term your employees are far more likely to remember the criticism than the praise.

Another example is falling into a routine when giving praise. Many managers give out praise as part of their daily routine, but it doesn't take long for people to realise this, and the praise soon loses its meaning. Instead, try to be spontaneous. While expected praise is good, unexpected praise is always far more effective.

Also, be careful to praise people for their achievements, not their ability. While it may seem encouraging to be told that you are just good at something, Columbia University's Dr Heidi Halvorson says this can leave people vulnerable to self-doubt. "If being successful means you are 'a natural,' then it's easy to conclude when you're having a hard time that you just don't have what it takes." Instead, she says we should praise the things that were under their control. "Praise the process, not the person. That way, when he runs into trouble later on, they'll remember the process that helped them to succeed in the past, and put that knowledge to good use."

The Right Way

So how can managers praise their employees effectively? Firstly, try to be specific. Instead of telling them that they did well, tell them what they did well and how it led to a good result.

Also, try to praise your employees even when, despite their best efforts, things don't go as planned. It's during these times that praising an employee for their effort has the most impact, as it will help them to stop dwelling on their failure and restore some of their self-confidence.

As well as this, try to strike a balance when praising your employees. Although some employees will be more praiseworthy than others, only praising certain people in the workplace will leave others feeling neglected and demotivated. Instead, try to praise all your employees at some point or another, even if it's for some small achievement or just a job well done. Doing so will make them feel appreciated and leave them wanting to do well in the future.

This is the key benefit to giving praise. Unlike monetary incentive, which is limited by your organisations budget and the expectations of your employees, there is no cost to giving praise, and it is very powerful as a motivator. As well as this, it's also a reinforcing process - the more praise you give your employees, the more motivated they will become, and the more praiseworthy achievements they will give you in the future.

Rosalind Cardinal is The Leadership Alchemist and Principal Consultant of Shaping Change, an Australian consultancy specializing in improving business outcomes by developing individuals, teams and organizations. You can interact with Ros, learn more about leadership and management, and download a complimentary copy of her e-guide on leading change at her website.