The Question: Intrinsic, Extrinsic, or No Employee Reward?

by: Nichole Gunn February 7, 2011

Noah Weiss, a young part time programmer for Fog Creek Software, presented the owner of the company with an idea that ended up bringing in more than $1 million worth of almost-all-profit revenue.

A college student at the time, Noah noticed that similar company websites took advantage of place job ads. The co-founder and CEO of Fog Creek, a New York City based company, initially thought the idea wasn’t worth the effort it would take to program an online classified ad system. But, after learning of the potential revenue, Joel Spolsky saw dollar signs.

While the competitions’ ads ran for $250, Spolsky decided on $350 per ad. The idea behind this strategy is that most consumers believe a higher price tag is equivalent to better quality. It worked.

How do you reward an employee who helps bring in $1 million? This question, especially since software development is an idea industry, baffled Spolsky and his managers. Talking to Inc. Magazine, Spolsky explained, “You could argue that you don't have to (reward employees) – a software business is basically an idea factory. But I felt we needed to do something else to express our gratitude."

Going over the merits of intrinsic and extrinsic motivational techniques, and with much deliberation, “the company decided to grant the worker 10,000 shares of stock – an incentive for him to return for full-time work while also leaving aside a controversial direct cash incentive.”

While Joel was pleased with the incentive, Google offered even more incentive and benefits.

Rewarding employees is a necessary part of business. Employees need to know their efforts and accomplishments are valued by the company. And, as with Fog Creek, each company needs to develop their own unique employee incentive program.


About Nichole Gunn

Nichole Gunn is the VP of Marketing at Incentive Solutions, an Atlanta-based incentive company that delivers advanced, agile B2B customer loyalty and channel sales incentives programs.