I found this very interesting post in the Predictably Irrational blog (via Bas de Baar) where the author asks the question: Which is the best form of motivation – cash or gift?

I don’t think the word “motivation” is appropriate here – I firmly believe that money is not a motivation but rather hygiene factor in the work environment. I think “reward” is more appropriate word in this case as rewarding is a very powerful instrument in the manager’s hands for showing appreciation to the employee’s work and thus, indirectly to influence on the employee’s motivation.

Back to the main question: Which is better – cash or gift? I think there is no simple answer. I love the proverb that one size doesn’t fit all and I think it applies here, too. Some people like to be in control of their lives (or at least to think they are in control) and they would prefer having the cash so they can decide by themselves how to spend it. Giving them the cash shows them that you respect their right to make decisions, their freedom to live their live as they want to and I believe that this will increase their loyalty to you and their motivation to work better.

On the other hand, there are people who need to feel your attention, they need to know that the company and the manager care for them and thus giving them a gift shows them your special attitude. Giving a gift means you have spent some time thinking about the other person while choosing a valuable present.

While this mindset is individual, it is also strongly dependent of the national culture. There are countries where most people would appreciate the present and other countries where most people would prefer the cash. So when you make a decision about the form of reward, take in consideration the person’s mindset and their national culture.

In my country, for example, most of the people would prefer the gift even if it is much less in value that the cash. The Bulgarians have an external focus of conscious, i.e. we look for the reasons of everything happening in our lives outside of us. We always need somebody else to take care of our lives and we always hold the others responsible for our destinies.

The national culture plays a very important role but don’t forget that there are also many exceptions! The important thing to know is that there is no best way – it always depends on the person you are dealing with so in order to find the right way to reward them, you must know them quite closely, as the great managers do.

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