Motivating Without Money

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Such programs are more valuable than ever in a recession, according to a study conducted last fall by Towers Perrin that polled more than 10,000 respondents in 13 countries. (Globoforce, whose U.S. headquarters is in Boston, has closed several deals in the first quarter of 2009 with clients like Celestica and The Hartford.) Nearly half (49%) of U.S. companies have recognition programs, according to a May 2008, study from Watson Wyatt. But those programs only target 10% of employees in the U.S., compared with 36% at European firms, the survey found, so there's an opportunity to enlarge their scope and effectiveness. "This is a very simple way to motivate," says Elton.

There's a risk associated with rewards, however. Charles Jacobs, author of Management Rewired, argues in his new book that when managers dangle monetary rewards, employee motivation can actually suffer. It all has to do with how our brains are wired, he says. When we're focused on the work we're doing now, an area of the brain called the nucleus accumbens releases dopamine, which pumps us up and gets the brain working quickly. Focusing on an extrinsic reward, though, rather than work can be counterproductive, according to Jacobs, as it diverts the brain's bandwidth from the task at hand. "We like rewards and they work," Jacobs says. "But rewards can distract us."

Fulfilling Work Is the Best Reward

Extrinsic rewards are clearly not a panacea—the psychological lift that employees get from doing work that matters to them can be just as valuable. A new tool called the Work Engagement Profile— released by CPP of Mountain View, Calif., the same company that publishes the Myers-Briggs personality assessment—examines the internal motivations that fuel employee engagement. "Research shows that managers underestimate the importance of intrinsic rewards," says Kenneth Thomas, the profile's co-creator. "And now they're in a situation where they cannot use [monetary] rewards as much, so it's a perfect time for this."

Sherif Mityas, CEO of Movie Gallery, the video and game rental chain, is learning on the fly how best to engage his staff. Here's a company whose 25,800 employees have every reason to be in a funk: The company emerged from bankruptcy last May, consumer spending has plummeted, and movie rental chains like Movie Gallery are facing severe threats from online rivals like Netflix (NFLX), DVD vending machines, and video-on-demand offerings from cable companies.

Mityas' plan to keep employees motivated includes a new customer-focused training program to show employees how to sell games not just to teenagers, but to busy moms as well. Not everyone was on board with this—Mityas has replaced as many as 30% of store managers. Those who remain are engaged, in part because the managers who do the best job of signing up customers for the company's new subscription program will earn a trip to Hawaii. But what really inspires employees, Mityas finds, isn't the size of the prize, but the awareness of it among the staff.

"There's a lot of value in being recognized among your peers," he says. "It's about creating the desire to do the right thing every day."

Boyle is deputy Corporations editor for BusinessWeek.

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