Leading with Gratitude Ch 7

Study Notes

Many bosses believe that compensation (raises and bonuses) is the only way to show gratitude. However, this is a complex issue, as money is important for employees.
Often, employees perform work that should be compensated higher, but are not rewarded appropriately.
Bonus formulas are often too complicated for employees to understand, and the bonus may not reflect their individual performance.
It is important to have a transparent system that connects employee performance to financial rewards.
One Week Bath, a fast-growing company, has an effective bonus structure that involves sharing the year-to-date profit and how the bonus is calculated with the entire workforce.
Performance reviews and discussions about salary should be respectful and transparent.

Monetary rewards alone do not motivate employees in the long term.
A culture that emphasizes compensation can lead to high employee turnover, especially in industries like technology.
Research shows that most employees use monetary rewards like bonuses to pay bills or forget about them.
Targeted and meaningful rewards can be more impactful than cash bonuses. For example, gifting power tools to an employee building a new home can be appreciated.
Monetary rewards are a threshold issue. Once employees earn enough to meet their needs, other factors become more motivating.
A German and Swiss study found that tangible rewards were more motivating than cash bonuses.
Some work cannot be measured numerically. Attempting to assign a monetary value to some tasks could be demotivating or devalue the work.
Cash bonuses can lead to employees manipulating the system to maximize their rewards, which may result in them not prioritizing customer needs.
This happened at Wells Fargo when employees created unauthorized accounts to increase their sales figures and boost their bonuses.

It is essential to consider both qualitative and quantitative contributions of employees.
While financial compensation is necessary, it is important to express gratitude in other ways as well.
A thoughtful and timely thank-you card won't replace compensation, but it can be a more meaningful expression of appreciation.

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