Bonuses fail to motivate workers or improve performance

Feb 01 2006 by Nic Paton Print This Article

Company bonus schemes are ineffective at motivating employees or improving performance, according to a study of personnel professionals.

A poll of 183 HR directors and managers carried out by employee reward firm Innecto People Consulting found that despite bonuses coming top of the list of processes thought likely to motivate employees, more than six out of 10 (63 per cent) felt their bonus scheme was ineffective in improving workplace performance.

Seven out of 10 of those polled said their organisation had awarded staff bonuses in the past that were not justified, either because of pressure from the board or employees, or to appear successful to the outside world.

Most HR directors did not measure, evaluate or test their employee bonuses.

When questioned, just 18 per cent said they had carried out studies to measure the effectiveness of their bonus scheme, with 7 per cent doing so in-house and 11 per cent using an outside consultancy.

A total of 82 per cent had never evaluated their bonus schemes at all.

Deborah Rees, director of Innecto, said: "It amazes me that UK plc is throwing away billions of pounds each year on bonus schemes without certain knowledge that they are a wise investment.

"Bonuses can be an excellent way of motivating staff but only when clearly linked to performance and communicated properly," she added.

"HR directors have an opportunity to take the lead in investigating the role and purpose of their bonus schemes," Rees continued.

"Such poor investments would not be accepted in other business areas and so they shouldn't be accepted in the area of employee reward," she concluded.