I don’t think “paying for performance” is the most effective way to motivate employees.

I do think it helps employers allocate merit budgets. In sales compensation plans it may drive performance to some degree. And annual bonus plans, well – those are usually so complex, and the payment is so much later than the behavior it rewards I don’t know that they are highly effective either.

When you want to motivate performance go beyond pay and look at internal motivators.

Autonomy, mastery, and purpose are far more effective in motivating employees than paying for performance alone.

Autonomy refers to the freedom employees have to make decisions about how they work.
Mastery refers to the desire to improve and develop new skills.
Purpose refers to the idea that employees want to feel like they are making a meaningful contribution to the world.

Paying for performance isn’t the only tool in your toolbox to motivate employees.

If you are a leader, focus on creating a work environment that supports autonomy, mastery, and purpose.

If you are an employee, comment below and tell me what motivates your performance.

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