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Workplace Motivation - 20 December 2011

It’s just a few days before Christmas, and for many people in the western world that means one thing: a rush to finish buying Christmas presents. The lingering effects of the global financial crisis means many consumers are spending less, but there are some who are still spending big – really big.

Recently, a list of the most extravagant gifts was released by TIME Magazine. Got a newborn baby? Consider a $17,000 pacifier made of 14-carat gold. Keen to buy your pooch a new dog collar? There’s one that contains two thousand diamonds and costs $3.2 million. And if you’re still stuck for ideas, there’s a kids’ cubby house (complete with air conditioning) for $23,000 and a personal submarine for $2 million that travels 1000 feet below sea level.


What many people don’t realise about gift-giving is a trend known as deadweight loss. It was proven in relation to Christmas presents in the early 90s at Yale University. Researchers discovered that what we spend on a gift is not what it’s deemed to be worth by the person who receives it. In fact, up to one-third of the gift’s value is diminished by the time the wrapping paper is ripped off. In other words, if you spend $100 on a present, it’s perceived to be valued as low as $70 by the recipient.

The researchers found the best presents were either totally flexible (such as cash) or very flexible (such as gift vouchers). The perceived value of those two was much higher than gifts.

Deadweight loss also occurs in the workplace every time you try to motivate employees. What you spend in terms of tangible rewards – and what you invest in terms of intangible incentives – are probably appreciated much less by your employees than you think. Here are a few examples of the most common deadweight losses in the workplace:

- Offering rewards which consist of fixed prizes that are decided just by management
- Running employee-of-the-month programs that are winnable by only a few people
- Providing training without any input from staff members on what they need
- Repeating the same R&R programs, week in week out, without creativity
- Relying too much on tangible rewards rather than intangible recognition

To maximise motivation at work, you need to minimise the deadweight loss by being totally flexible or very flexible with how you incentivise staff. Here are several ways of doing it:

- Provide gift vouchers for stores that are aligned with employees’ personal interests
- Find out employees’ passions and talents and incorporate these into their jobs
- Ask people what training they’d like and cater it to their preferred learning styles
- Get employees involved in the design of rewards and recognition programs
- Choose lunch and dinner venues with a diverse menu that caters for all tastes
- Set up a system whereby employees are able to formally recognise each other
- When giving people a prize or reward, give them a choice of options to select from
- View motivation as a tailored exercise to be conducted individually with each employee rather than a group-focused one-size-fits-all approach

The key is to make your motivation strategy as totally flexible or as very flexible as you can. Otherwise, the deadweight loss will increase in proportion to the reward’s inflexibility. People say that when it comes to gift-giving, it’s the thought that counts. In a way, that’s true. It counts, but it counts only to the degree that it ramps up or brings down deadweight loss.


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