A key element for a successful employee idea and suggestion program is the type of reward the employee receives for ideas.

The traditional reward in an employee suggestion program is a money reward. The employee submitting a good suggestion receives a bonus equal to a percentage of the value of the idea. But the question is, is giving employees such money rewards an effective incentive to get employees to submit even more ideas?

Money is Poor Reward

Many studies over the years conclude that

money rewards are not good at motivating employees.

One study by several prominent psychologists on happiness and major life events seems to support the notion that raises and bonuses will have only short-lived effects. The study argues that only life events that occurred within the past three months have any influence on one's happiness...or more specifically, on one's "feelings of subjective well-being."

Among the life events mentioned is a raise. Study results suggest that a bonus or money reward is like a martini, inducing optimism and elevating the spirit -- but only temporarily.

Previous studies seem to concur. Researchers tell us that only 1-2% of people's difference in happiness is attributable to their difference in income. In fact, a study done by the University of Minnesota on twins indicates that happiness is in large measure due to genetics -- not money. The stable component, or "set-point" of happiness, is 80% gene-driven, say scientists.

Money Rewards Forgotten

Ed Diener, Department of Psychology, University of Illinois at Urbana - Champaign, coauthored the study of the short-lived effect of life events on subjective well-being. "A raise just won't have an effect on employee satisfaction long-term," says Diener. "It may be forgotten by next week."

Although Diener's study was conducted on a sampling of recent college graduates, he and fellow researchers theorize that the personality stability they observed is likely to be even stronger in older adults.

In discussing the study results, Diener cited other studies in the subjective well-being field and pointed out that "successful pursuit of personal goals does play an important role in maintaining and increasing one's psychological well-being."

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