Should you reward staff for acquiring new customers?

As Gordon Gekko said in the 1987 film, Wall Street: “It's all about bucks, kid. The rest is conversation.”

Is this quote as poignant in today’s sales environment, however? According to a recent Psychology Today blog from Adrian Furnham Ph.D, a theory that has been doing the rounds for over 20 years suggests that rewarding sales staff with bucks, or rather monetary rewards, can actually “inherently reduce task interest and creativity”, and may be less motivating for sales staff, in terms of securing new customers, long-term.

The theory, outlined in A. Kohn’s 1993 book, Punished by Rewards, is perhaps more significant in today’s super-competitive sales environment, where creativity is deemed more valid in finding new ways to attract and retain customers. Furnham’s blog post refers to six reasons Kohn suggests monetary rewards in sales may be counter-productive:

• Pay is not a motivator – it has only a transitory impact on motivation. Also too little money can demotivate as it can almost be an insult. It does not mean that more money will bring about increased satisfaction & motivation.
• Rewards punish - this is because they, like out-right punishment, are manipulative. By making a bonus contingent on certain behaviours, managers are seen to manipulate their subordinates. This experience of being controlled is likely to assume a punitive quality over time.
• Rewards rupture relationships – Incentive programs tend to pit one person against another, which has negative repercussions. This threatens good teamwork. Rewards bring about internal competition not co-operation.
• Rewards ignore reasons –Managers sometimes use incentive systems as a substitute for giving workers what they need to do a good job, like useful feedback, social support, and autonomy. Offering a bonus to employees requires much less input and effort.
• Rewards discourage risk-taking – People working for a reward generally try to minimise challenge and tend to lower their sights when they are encouraged to think about what they are going to get for their efforts. Their focus is wrong.
• Rewards undermine interest – Extrinsic motivators are a poor substitute for genuine interest in one’s job. If people feel they need to be ‘bribed’ to do something, it is not something they would ordinarily want to do.  

“Put simply, the thesis is this: people who have been given (explicit) rewards at work (such as performance-related pay) may work harder and produce more but it is of lower quality, contains more errors and reduces creativity,” Furnham states. “Rewards may make people less willing to take risks, be less playful and experimental and more mechanical.

“When people begin to evaluate our work and explicitly reward some measurable output, the creative juices dry up. The creative process is replaced by ‘reward thinking’, which distracts individuals from the activity, thereby reducing the spontaneity and flexibility of performance.”

Furnham does not suggest that businesses should be doing away with monetary rewards altogether, though. He suggests rewards presented in a “non-salient fashion for genuinely original work” may actually be the key to unlocking further creativity from staff, as well as underpinning a more successful route to acquiring and retaining new customers.