By Aubrey C. Daniels, Founder and Chairman, Aubrey Daniels International

If you look across corporate America, you see organizations trying to motivate their employees in similar ways when it comes to getting their best performance; this time of year especially. It’s a likely scenario in which many employees have a calendar on their computer or maybe even on a wall where they count down the days when they will receive their end-of-year bonus. A good thing, right? Well, not exactly.

Thomas Gilbert wrote in his book, Human Competence: Engineering Worthy Performance,"Money is a beautifully honed instrument for recognizing and creating worthy performance. It is the principal tool for supplying incentives for competence and therefore deserves great respect. Any frivolous use of money weakens its power to promote human capital – the true wealth of nations. "

To truly understand the impact bonuses have on employee performance, managers must understand behavior and contingencies of reinforcement. In most organizations, bonuses are loosely contingent on performance. Those who receive them tend not to know specifically what they did to earn them.

And, while most are typically given at the end of the year, employees are disconnected to the specific actions they took (i.e. behaviors they engaged in) to create valuable performance. What management perceives as reinforcing is disconnected from the behavior that produced the performance in the first place.

The science of behavior (known as behavior analysis) tells us that immediate and certain consequences are the most powerful motivators. Annual bonuses are neither.

With an understanding of the right behavioral tools, leaders can ensure that their intentions of reinforcing strong performance with an end-of-year bonus are rewarded with stronger performance in the future rather than it turning out to be a bad investment, which is the usual case with the annual bonus. The only thing that saves the average company from being behind their competitors by wasting money this way is that the competitors are doing the same thing.

The following will guide any leader through this bonus season:

1. Don’t Reward Showing Up: Rewarding all employees, regardless of performance, will not improve production, quality, customer service or creativity. If all an employee has to do to get a bonus is stay on the payroll, then you’re abusing this practice. Bonuses should be aligned with individual accomplishments. Some organizations have a practice that they think is a performance bonus but is not because they divide the bonus pool equally across jobs or pay grades. You cannot reinforce a team. You can only reinforce the behavior of team members.
   
   Since it is rare that all members contribute equally, bonuses should not the same. Giving bonuses that employees know is not earned is a great way to create poor morale.


2. Reinforce Employees Often. Don’t rely on this annual practice to show your employees what you think of them. Building feedback and positive reinforcement into your daily management practices will ensure that your employees are delivering their best all year and not just the months leading up to bonus season. Employees need positive reinforcement for their accomplishments, and every employee has accomplishments every day, or they don’t really have a job.


3. Employees Also Should Know What to Expect. Although the amount of a bonus will probably vary according to the success of the company, employees should know that their performance throughout the year will determine how much of the pie they will get if the company can afford a bonus. And if your organization is struggling, look for other ways to motivate employees such as new project opportunities, recognition or extra time off.
   
   At my company, ADI, we use a monthly scorecard as the basis for profit sharing. The amount of the money employees get is tied to their performance on several measures for which they are accountable. If a person’s share of the profit amount is $1,000 but their score is 800, that person would receive only $800. They know what to expect.


4. Bonuses are not Compensation. Including bonuses as part of your organization’s compensation package will not have the intended effect. If bonuses are something people expect, they will not work hard to earn them. Organizations that use bonuses as deferred compensation have the potential to upset employees should they not receive them. Plus, monetary rewards have their limits in terms of motivation.
   
   In fact, many people say they would prefer to know they are doing a good job, rather than get more money. A manager should give rewards that are valuable and meaningful to the individual. What’s reinforcing to you is not necessarily reinforcing to the person next to you.
   
   Instead of relying on bonuses to create good will, get to know your people and understand what uniquely motivates them. Money is a poor substitute for good management. The most important thing is how people are treated every day.

I’ve been known for saying "if you give an employee something for nothing, you will make them good for nothing." Since money can be a powerful motivator, be sure to use it in a way that creates value. I am all for having a system in which employees can earn a lot. But if that money does not create value, then it is no good for the company nor the employee in the long run. In conclusion, heed the words of Gilbert: "Any frivolous use of money weakens its power to promote human capital"

Aubrey Daniels, a thought leader and internationally recognized expert on management, leadership, safety and workplace issues, is considered an authority on human behavior in the workplace. As founder and chairman of Aubrey Daniels International, he helps organizations employ the timeless principles of behavioral science to re-energize the workplace, optimize performance and achieve lasting results. Aubrey is the author of six best-selling books widely recognized as international management classics including Bringing out the Best in People: How to Apply the Astonishing Power of Positive Reinforcement and Performance Management: Changing Behavior That Drives Organizational Effectiveness.