Money
for Employee Ideas?
by Jim Collison
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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