Why it's just as important to dole out the praise as it is the pay

We’re all too familiar with the saying “Money can’t buy happiness.” Well, it seems this sentiment is as true in the workplace as it is in our personal lives. Just as a bigger house, car or flat-screen TV can’t define our happiness at home, neither can a bigger paycheck, bonus or raise at the office.

What does bring more satisfaction, according to a recent McKinsey Quarterly global survey, is praise from our superiors. Recognition and support go a long way toward boosting an employee’s self esteem, building confidence and enhancing performance. Those are huge positives that, thankfully, don’t cost your recession-challenged business a lot of money!

Salary isn't everything

Conducted in June 2009, the McKinsey survey garnered responses from more than 1,000 executives, managers and employees from around the world (and representing a range of industries).

The survey posed the question, “Which incentives do you find boost employee morale and productivity most?” The answers were:

• Praise and commendation from immediate managers – 67%
• Attention from leaders – 63%
• Opportunities to lead projects or task forces – 62%
• Performance-based cash bonuses – 60%
• Increased base pay – 52%
• Stock or stock options – 35%

As the report outlining the survey results explains: “The respondents view three noncash motivators … as no less or even more effective motivators than the three highest-rated financial incentives. The survey’s top three nonfinancial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth.”

How to keep employees engaged

The results of this survey are good news for cash-strapped employers still crawling out from under the recent economic downturn. “There couldn’t be a better time to reinforce more cost-effective approaches,” explains the report. Money’s traditional role as the dominant motivator in the workplace is taking a back seat to more intrinsic benefits.

So how do you act on this important message and motivate employees to give their best? Here are some simple, low-cost employee recognition ideas to enhance job satisfaction and performance:

Make a note of it
A hand-written thank you note shows you valued a person’s work enough to take time out of your day to acknowledge it. It’s a simple gesture with great impact. For even more impact, mail a card or letter home so the employee can share the praise with family members.

Point out employees publicly
Use a public forum, such as a staff meeting, to recognize excellent performance, so an employee’s moment in the spotlight is shared with others. Look for other creative ideas for employee recognition, such as company newsletters, intranets or even articles in local newspapers.

Little things mean a lot
It’s great to recognize the "big wins," but it’s also important to call attention to the everyday achievements. Reward employees for their “quieter” contributions with a thank you note and if the budget will allow, something extra like a store gift card, desktop award or free lunch.

Encourage peer recognition
Implement a program in which employees recognize one another. One version of this could be a "Pay It Forward" type of award in which the first employee who receives the award identifies the next employee who deserves the award.

Create a work environment that supports achievement
Display inspirational and motivational posters on the wall, introduce team-building or motivational games as a part of staff meetings, and provide occasional social events on company time to strengthen camaraderie among employees and management.

Keep in mind, too, that most employees enjoy new, challenging opportunities. Avoid micromanaging employees so they’ll gain a sense of control and mastery with their work, and involve them in (or have them lead) fresh projects that will expand their skills and stretch them creatively.

Why it's just as important to dole out the praise as it is the pay