Workers Prefer Gifts To Small Bonuses

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On more than a half dozen occasions, Forbes has generously given me gifts showing its appreciation for my work. At what used to be an annual event called Veterans Day, held for employees who had worked at the company at least five years, the Forbes family invited us to their compound in New Jersey for an all-day picnic where we got thoughtful tokens related to the picnic theme, plus small cash gifts based on the number of years we had worked at the company. I received barbecue cooking tongs one year. Another time I got a beach towel and plastic water bottle emblazoned with the Forbes logo. The family no longer celebrates Veterans Day, but in January 2012, I got a Kindle Fire as an award for writing stories that drove traffic numbers that were among the highest on Forbes.com, and this year, I got another such award, this time in the form of a $250 American Express gift card. How did all these gifts make me feel? I wish I could say, appreciated and motivated. I was certainly happy to receive them. Butmaybe I shouldnt write thisthey didnt give me the urge to work any harder. I was most tickled by the Veterans Day gifts, because I realized that a colleague had to put thought and energy into finding nice things tied to a picnic theme that all of us would enjoy. It turns out that my affection for the Forbes beach towel may be similar to what many employees feel about small gifts from their employers. Surprisingly, a recent study showed that workers felt more pleased, and motivated, when they received tangible objects rather than cash.

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Ray Fisman, a wonderfully thoughtful, quirky professor at Columbia Business School who has written for Forbes and who now contributes regularly to Slate and also to the Harvard Business Review, had an intriguing piece yesterday that ran in both of those publications, about a studypublished last year by German and Swiss researchers showing that small, thoughtful gifts, or at least the option to receive such a gift, motivate employees more than cash gifts worth the same amount. The researchers tested the idea at a German universitys economics library where students were recruited for the temporary job of spending half a day cataloging books for 12 euros ($15.50) an hour. Before they started, the researchers told some of the workers that they would get a seven-euro bonus, a 20% pay hike to the promised wage. Another group got a gift-wrapped water bottle worth seven euros. In some instances the researchers even left the price tag on the bottles. The researchers gave a control group nothing aside from their salary. What they found: Those who got the cash improved neither the speed nor the accuracy of their work. but those who got the water bottles increased their productivity by 25%, which more than paid for the cost of the bottles. A separate study showed that given the choice between cash and a water bottle, 80% would take the cash but still work harder. So it wasnt that the workers loved the bottles; Rather it was the thought that counted and simply handing out a few more euros hardly takes much thought, writes Fisman. It seems that offering the option of a gift makes a difference to employees. The researchers did one more version of the experiment. They gave workers a five-euro note, folded into the origami version of a little shirt, plus a two-euro coin painted with a smiley face. This gift resulted in the greatest productivity gain. Fisman notes that the study is obviously framed around low-wage workers and a cash bonus that is quite small. Investment banks know the effects of six-figure bonuses. As Fisman writes, its hard to imagine that the averageWall Street trader would work harder for a pink Cadillac than a sixfigure bonus. Obviously the stakes are higher when greater amounts of money are involved. [G]ifts probably work best when tailored to the particular set of employees, he notes.

For Fisman, that is the most important finding of the German study. Workers want a sense of meaning in their lives, and small, thoughtful gestures make them feel like they belong and that their bosses care about them, and that spurs motivation. As for my response to Forbes gifts, I would say my motivation to do journalism comes from within and especially in this tough economic climate for my profession, I feel lucky and appreciative to have a full-time job. But if Forbes wanted to give me another water bottle, or a cash bonus, I would appreciate either gesture.