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To motivate workers, boost their egos not their paychecks

By S. Mitra Kalita
Published Last updated This article is more than 2 years old.

What’s the best way to motivate employees to do their best?

There’s good news for cash-strapped employers. Money isn’t everything.

In a piece for the Harvard Business Review, McKinsey director Scott Keller says social pressure is actually a much bigger motivator. So picture a social contract (doing the right thing) versus a market contract (paying people to live up to their end of the bargain). Here, Keller invokes Freakonomics and its example of a day-care center that started charging parents $3 when they were late. “By imposing a fine, the center had inadvertently replaced social norms with market norms. Freed from feelings of guilt, parents frequently chose to be late and pay the fine — which was certainly not what the center had intended.”

So what social pressure does work with employees? Keller cites Infosys Technologies and its practice of rewarding good work in front of a large audience, including senior management. PepsiCo CEO Indra Nooyi writes thank-you notes to staff members’ spouses. Then she expanded the recognition: to their parents.

Keller said, ”Some managers might dismiss these as token gestures with at best a limited impact. In keeping with the significant body of evidence from the social sciences, employees on the receiving end would beg to differ. They say that the resulting boost in motivation and connection to the leader and the company can last for months if not years.”

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