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Entity reports on the effects prizes have on office productivity, camaraderie and environment.

Management is not an easy task, especially if you are trying to balance paperwork, constant meetings and a group of disinterested employees. Many bosses use a reward method like “employee of the month” or a cash bonus. But are these incentive programs really a good idea? Let’s dive a little deeper to find out the positives and negatives of this management tactic.

Positives

1 Incentives can encourage productivity.

If you want your employees to put their all into their work, there’s often no better way than to offer a monetary prize. It increases productivity and, as the Houston Chronicle shares, results in employees who “have increased morale, job satisfaction and involvement in organizational functions.” When workers are happier because they are being recognized for their hard work, they are encouraged to be more productive.

Non-monetary incentives are also effective in creasing productivity. These incentives include flexible work hours, training opportunities and working more independently. According to the Houston Chronicle, “The rewards and incentives are valuable to an employee because they allow workers to learn new skills and pursue advancement opportunities.”

2 They can make slackers easily identifiable.

After a few months of giving out awards to the best employees, you will be able to pinpoint the men and women in the office who aren’t ever recognized. Before they may have been able to hide in the shadows, but now that you are paying more attention to progress reports, its easy to weed out the loafers.

The Incentive Research Foundation suggests using quota-based incentives. These programs reward performance based on whether or not employees are meeting goals. If you use this, you will be able to tell which employees are working harder than others.

3 They can create healthy competition.

Healthy competition is an important part of school or work environments. When you have non-monetary incentives, some team members may even help other people attain goals. Forbes advises that cooperative competition or “coopetition” is key to a work environment.

Coopetition is rooted in Game Theory, which suggests that “by working together, team members can push one another to be more productive and produce stronger work.” This happens because, as Marilee B. Sprenger, author of “The Leadership Brain for Dummies,” says, “Working together and helping each other releases brain chemicals that enhance motivation, pleasure and bonding.”

Negatives

1 Incentives can discourage drive.

On the other hand, employees that feel even their hardest work doesn’t merit a prize might become angry and lax in their work. This can lead to a lack of drive at work and a decrease in that employee’s progress.

Dan Pink, best-selling business author, tells Business Insider that the reward-and-punishment system typically works to motivate men and women to do simple tasks, not long-term and complex projects.

2 They can cause temporary compliance.

When an employee works hard, how do you maintain that drive? According to Harvard Business Review, incentives often don’t work because “once the reward runs out, people revert to their old behaviors.”

Harvard Business Review points out that incentives such as giving your child candy to make him or her stop crying “do not alter the attitudes that underlie our behaviors.” They are merely “extrinsic motivators” and will not “create an enduring commitment to any value or action.”

3 They can foster unhealthy competition.

While incentives can result in healthy competition, there is also a very high possibility that some men and women will not enjoy the added stress.

According to Sprenger, “Direct competition, or competition between two individuals, can be destructive – if there can only be one winner, then there is always a loser.” Too much of this kind of competition can lead to a decline in productivity and a rise in hard feelings between employees.

But at the end of the day, it’s really up to the manager. There are positives and negatives to rewarding a select group of employees and it can be hard to decide which path is the best to take. Keep in mind that your employees need motivation to work their hardest and a little encouragement – in the form of prizes or kind words – can go a long way.

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