Do Bonuses REALLY Work?


I was recently speaking with someone and the topic of paid incentives to staff came up.

I have worked in a practice many years ago who tried out a bonus system. I also considered the validity of such a system when I owned my practice and was thinking of ways to reward my staff. While I honour the good intentions behind the practice owners who introduce a paid bonus program, I don’t believe it actually achieves the results they desire.

The desired results are to:

  • inspire productive performance,
  • reward successful efforts, and
  • acknowledge team members.

Our performance at work is triggered by both EXTRINSIC and INTRINSIC motivators. Paid bonuses are extrinsic motivators, and include all types of physical rewards. In order for these rewards to be effective in inspiring good performance, the staff members need to first see value in what is being offered. This will not be uniform across the whole team. And what they find ‘of value’ will change over time. This means a $200 bonus today may excite your team, but the same amount after a couple of years of achieving goals may start to appear too meagre to be motivating.

A consideration to be mindful of is that people who work in the health industry do so because one of their main drivers is to help people. This driver is not satisfied with monetary reward, but is gratified by the human connections they develop.

In other professions, such as sales, it is a very clear-cut process in determining who is responsible for higher turnover. This person sold this much so get’s that paid bonus. However attributing fair cash reward between the dentist who diagnoses and treatment plans, the nurse who is their support in this process and the receptionist who co-ordinates everything is, I believe, fraught with complications. It is unlikely to have any happy agreement long-term and the result is feelings of resentment among the team. The exact opposite of what the reward was intending to achieve. 

For these reasons, I do not find cash bonuses as an effective system.

The more powerful path to achieving the 3 desired results listed above is to inspire people through their intrinsic drivers.

We are all motivated by the same intrinsic drivers, says Daniel Pink  in his bestselling book ‘Drive’.

AUTONOMY: Our desire to be self-directed

MASTERY: The desire to get better skills

PURPOSE: The need to do something that has meaning and importance

Designing your working environment to have individual’s needs of autonomy, mastery and purpose met will result in much higher individual and team motivation.

The creation of this space is accomplished by:

  • Handing over responsibility, authority and control over role performance to your staff. Don’t micro-manage or be tempted to want them to achieve results your way. Allow them to discover their own process.
  • Continually provide opportunities for further training, and if desired, broaden their range through added responsibilities.
  • Ensure you have a powerful mission statement, team culture and philosophy. Keep them ‘alive’ by incorporating them in to the decisions you make as a practice and use them as a guide for workplace behaviour.