After turning several different concepts into flourishing businesses, I have learned that every great idea only becomes something real when gifted people help implement it. Employees and managers form a symbiotic circle, where each support the other. For management, this support should holistically provide employees with necessary feedback and recognition. This allows them to not only perform their best work, but to also evolve into the best versions of themselves.
Feedback and recognition are the vehicles that drive performance and growth for employees and companies alike. When leaders highlight the strengths of people at a company, they are far more engaged, productive and creative. There are clear and measurable positive impacts to the bottom line. With all the options available, what is the best method for recognizing employee contributions?
Some people are driven by financial reward; so provide it. In some fields, like sales or finance, linking compensation to performance makes sense. Leaders in many knowledge-worker industries make the mistake of tying output to a percentage increase in salary or bonus. This type of conditioning may have worked for Ivan Pavlov, but the people you hired deserve better.
Instead of baking in a financial bonus to motivate performance, give it to them up front. Pay a fair salary based on market rates and one commensurate with a person’s knowledge, skills and abilities. This strategy allows workers to feel good about their relationship with you and the company from Day 1.
Employers who lowball their talent before hiring, often initiate an adversarial salary-negotiation process. When people accept the terms of a new job under duress, they view a subsequent bonus or raise as making up for an employment offer that did not feel right. That strategy will never elicit the best from your team.
There are certainly practical elements to a bonus that hold meaning for employees, so give a spontaneous material gift when it’s deserved. This feels good but does not meet an important need in and of itself. Beyond the gift is something far more potent and meaningful: appreciation.
Appreciation does not mean to just recognize someone. By definition, the word also indicates that you are adding value to them. Letting employees know that you are aware of their efforts drives them to achieve through intrinsic motivation, which is scientifically proven to provide more sustainable drive than a bonus.
We are often our own worst critics, and many of us work each day with no objective way of knowing how we are doing. One might think that this is a good thing, since an employee who is worried about his or her performance will always strive to do better. But people who work in perpetual fear get stressed out and frustrated, which locks up the flow of creative ideas and lowers motivation.
Regular recognition of a job well done, unwinds this tension for the individual and boosts morale collectively. You can generate more revenue and increase productivity and efficiency across the board by simply complimenting specific examples of excellent work.
Giving raises and bonuses for achievements and feedback on accomplished goals are only half the motivation game. The highest level of personal fulfillment is attained when people become something better. This is when the extrinsic and the intrinsic meet. That’s when your employee’s focused work has led to a position of mastery, and you’re telling your employee that, beyond having performed well on a task or having increased revenue, you see this transformation in him or her.
The hallmarks of a person’s life are often similar: graduation from various levels of education, the first step on a career path, a wedding or the birth of a child. For most people these events spark a significant change in what they do and how they do it. For example, people change their schedules after graduation to have more structured periods of work and play.
Satisfaction comes from realizing, say, that now you are a lawyer, someone with a doctorate degree, a manager, a wife or a mother. It is the collective impact of our choices and efforts that provides a new identity. It is not the change in title or attendant salary that has the greatest impact for employees; it is your reflection of the transformation you see.
People are driven by extrinsic motivators like recognition and compensation or the intrinsic achievement of mastery. All these share the common theme of positive transformation. When leaders vocalize that, they empower their employees to do their best work and step into expertise or leadership roles. The easiest way to recognize and motivate is to stop in the hall and say, “I see who you were, respect who you are, and I am excited for who you are becoming.”
David Hassell is Founder and CEO of 15Five, a SaaS company with a powerful and simple solution that gathers critical insights from employees in minutes each week, enabling informed management to get the visibility they need to boost engagement and drive alignment across their entire teams. Follow David on Twitter @dhassell and @15Five.
This post originally appeared on Entrepreneur.com