How to Motivate Gen Y: Let Them Give Away Your Money?

Evidence shows that, when it comes to retaining Gen Y, it’s not all down to dollars and cents. Training, a collaborative work environment and a sense of shared purpose can all motivate younger workers to stay put, not just a healthy pay check.

But now one expert on motivation is suggesting a new, out-of-the-box method for encouraging and retaining workers that you’ve probably never heard of before. And it’s just the sort of idea that might appeal to young, idealistic Gen Y, who are known to desire a sense of community and a social justice component to their work.

Give Bonuses … to Someone Else

On his blog recently, Dan Ariely, author of The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home and other books, presents a new twist on the old idea of cash bonuses for good performance. His radical revision – offer staff cash or treats to give to someone else. Baffled? Ariely explains the research basis for the idea:

A new paper by Mike Norton and his collaborators sheds a very interesting light on the ways that organizations should use money to motivate their employees, boost morale and improve performance — benefiting both employees and their organizations. The researchers look at a few ways that money can be spent and how that affects outcomes such as employee well being, job satisfaction and actual job performance. Specifically, they examine the effect of prosocial incentives, where people spend money on others rather than themselves, and they find that there are many benefits to spending money on others (think about the inherent joy of gift-giving).

The researchers looked at the effect of different incentives. In one case, employees at an Australian bank were offered vouchers of $25 or $50 to spend on a charity of their choice.  In another, one group was asked to spend some money on themselves and another to spend some money on a colleague (so-called “prosocial” spending).  What did the study reveal?

Happier, friendly teams

“While a gift of $25 did not make a difference when it was donated to a faceless and impersonal charity, a gift of $20 provided numerous positive outcomes when it was given in the form of helping out a teammate,” writes Ariely. The researchers also concluded that those who gave gifts to teammates showed more interest in their c0-workers and a greater willingness to help them out going forward.

So would a program like this work at your company? Personally, I find buying presents for those I don’t know well nerve-wracking and imagine I would be less than pleased if my boss demanded I do it, but this research suggests perhaps I am grumpier than the norm on this or am underestimating how much I’d enjoy making a colleague’s day. What’s your reaction to Ariely’s proposal?

(Image courtesy of Flickr user JD Hancock, CC 2.0)

London-based blogger Jessica Stillman covers generational issues and trends in the workforce for BNET.com.