Praise, not pizza, is the great employee incentive

A few years ago, a study by Duke University professor of psychology Dan Ariely made its way around the internet, with claims that pizza is a better incentive than cash. For the study, Ariely chose a group of computer chip factory workers in Israel. The workers were split into four groups: One received pizza for having a productive week, one received written compliments from management, one received $30 per person, and the fourth group received nothing.

At the beginning of the work week, the pizza group increased its productivity by 6.7%, while the cash group's productivity rose by 4.9%. Those who received compliments increased their productivity by 6.6%.

So, is this proof that pizza, not cash, is the great motivator? Probably not. By the end of the week, the group that received praise from management - via text message - outperformed the other groups. The cash group finished last - even behind the control group.

Employees don't want cash?

U.S. employers should take the pizza experiment with a grain of salt - or a shake of parmesan cheese. Not only did the study only look at one group of Israeli workers at a single factory, it only lasted a week. There's no way to tell if the workers would have gotten tired of pizza or if the cash-incentive group would have acted differently if the $30 was part of an ongoing program. For that matter, it's unclear if pizza was a novelty to the workers or if they were as used to eating pizza as Americans.

Employers should also consider the type of work they are rewarding. For example, are factory workers motivated in the same manner as office workers? After all, you don't want to risk putting everyone into a food coma at lunch time if there's a time-sensitive project on the line.

"I think that the effectiveness of incentives does depend on the type of industry, as well as the type of position you are talking about," says Ken Cole, Senior Recruiting Manager for Beacon Hill's Technologies Division in Cleveland. "For example, individuals in sales positions might react favorably to financial incentives over other types of incentives because cash compensation is normalized in that field. It's about 'chasing the carrot', so to speak – they enjoy the monetary rewards, and it is typically a big reason why they get into that field in the first place. So before implementing a certain type of incentive across the board, consider the motivating factors of each of your teams and why they do what they do."

What the pizza experiment did show is that praise and recognition are powerful motivators - and that conclusion is corroborated by other studies. For example, Gallup reported that two-thirds of American workers say their work isn't recognized and they'd be less likely to look for another job if they received more praise from senior leadership. Another study conducted by EY found that 40% of workers feel isolated in the workplace, which can lead to disengagement from the job.

So what do employees want?

Cash may not be the top motivator, but employers will be hard-pressed to find the employee who will turn down a cash bonus at the end of a difficult week. Likewise, pizza and similar refreshments can have a positive impact on team morale, especially when it provides an opportunity for everyone to come together and celebrate one another's achievements.

Consistently, praise from management is a top incentive; and the higher up the praise comes from, the more motivating it is. Gallup found that employees were more likely to recall praise from the CEO than from a direct manager. It's possible that praise from leadership is more desirable than cash because recognition can lead to better career opportunities in the future.

Leaders should ask their employees what type of incentives they'd like to receive and then measure outcomes like productivity rates. At the end of the day, everyone is unique - some people like pizza while others can't stomach it. But few people will turn down recognition from the company boss.

To learn more about incentivizing employees and growing quality teams, check out our resource center today.

This content is brought to you by the Marketing Team at Beacon Hill Staffing Group.