The pervasive “Employee of the Month” incentive is a poor strategy for motivating employee productivity, says Gregorio Billikopf, a labor management farm adviser for the University of California. Normally, the contest for Employee of the Month will take place merely among the top 15 percent of a farm’s workforce, he notes, meaning these (already) top employees will be the only ones motivated to compete for the award. The rest will either ignore the incentive or hold a grudge toward the company — and the award recipients.
That’s why most organizations with Employee of the Month awards soon create rules limiting the frequency that personnel may earn the honor. This is meant to avoid having the same few individuals always win the award. Still, in the end, the honor devolves to little more than taking turns to celebrate different employees, regardless of performance and, hence, devoid of meaning, Billikopf says.
For example, Billikopf refers to a story told to him recently in which an employee shared that she needed some extra cash in October, so she was “going to go for the award” that month. She reported back that she did indeed earn the October Employee of the Month cash award, only to return to her normal performance level until she was eligible for the award again.
“The fallacy of this incentive revolves around having employees compete for a fixed price,” Billikopf says. “It would be better to design an incentive so that every employee who surpasses a certain performance level may earn the award — even if this means smaller awards.”