How do you manage team motivation? Rewards?

Good answers above but at the absolute most basic, pat people on the back and tell them when they've done a good job. It's amazing how often this doesn't happen. And it's amazing how good it makes people feel. But make it genuine, not phony, not for something that wasn't really all that good.

The dangers of offering monetary rewards cannot be overstated, although there may be (occasional) times when this is appropriate. It's a fine balance...

Setting precedent for expectations of rewarding other employees is certainly a problem - you run the risk that others will misjudge the worth of their own contributions, and then be resentful that they were not similarly rewarded. The moment someone is given a monetary bonus it places a very public value on their contribution - and thus an implied comparison with the (lesser?) contributions of others. Resentment can destroy a team.

I think an even greater problem is the displacement of intrinsic motivation for the performance and work within your team. I'd hope that my team members are giving their best not primarily for monetary reward, but because of features intrinsic to their personality ('desire to succeed', 'pride & integrity', 'desire to change the world', 'solve a difficult problem', etc...) - the very reason they're part of your team in the first place! Psychologists have shown that these 'intrinsic motivators' are quickly displaced by 'extrinsic motivations' - like monetary reward. You could begin to replace the great intrinsic drives in your team with the very simple pursuit of monetary bonuses, which over time become even less motivating. This has been well studied for a few decades - and there's even a great summary in wikipedia (see 'Motivation').

I believe that a better reward for exceptional performance, where praise and gratitude are deemed not enough, is endowing greater autonomy and control over the direction of a project on the performing team member. You are likely to further benefit, because you're now rewarding past performance with a greater ability to perform in the future, bettering your project.

Joel Spolsky wrote a great piece in Inc. earlier this year describing this very dilemma. I won't spoil the outcome by giving away how Joel decided to reward an exceptional employee, but the article nicely explores these issues - and much more eloquently than me!

(Here's the link to Joel's earlier 2006 article referred to by fm: Econ 101 Management)

Ah, the balance of instrinsic and extrinsic motivation. IMO, this is one of the challenges, and part of the package, to becoming a good leader. If you have some extra time to read a worthwhile book I would recommend, "The Leadership Challenge", written by James Kouzes and Barry Posner. It's an easy read and offers relevant information.

Shawn

Joel says you shouldn't do [Econ 101 management][1], I agree.

I believe that they should feel like they are part of something big, something good, something is going to be awesome. If they feel it, they'll be like partner of the company. Because they want to stand by the product and say "I'm part of this awesome thing!"

This is not easy to do and maybe not even possible for some employees. After all maybe they shouldn't be part of your company either, since they are not sharing your vision and I'm sure there are other guys out there who will.

When it comes to reward, I don't think rewarding directly because they've done X or Y is great thing but rewarding with little luxuries of life now and then is a good idea.

Depends on the money you are willing to spend and interest of the employee, an XBox, [Optimus Keyboard][2], a ticket to some footbal game sounds like a good choice.

Also it's always great to get them something useful such big monitors, 3G Kits which you pay the monthly fixed fee, upgrading their mouses to something really cool, giving them a big dropbox account or Safari Bookself account etc.

Also giving them "time" is an awesome reward, let them have a free half day or a day per week for research, maybe reading time or just for office Quake tournament.

There are many ways to reward an employee without having to give them cash in terms of a bonus or a raise. The tricky part about giving a reward is that you immediately set a precedent for everyone else, so whatever you do, make sure it is repeatable and widely applicable so that no one feels left out.

Somethings I like to do for rewards include:

1. Public praise for a job well done.
2. Give out a weekly award for performance with a half day off on Friday.
3. For consistent performers, let them work from home one day a week, but not on Friday.
4. Cheap equipment upgrades like a larger monitor (this actually yields better performance so its a win:win).
5. Use training opportunities as rewards, another win:win as the employee becomes more valuable to the organization (books, local seminars, etc.).
6. If you have the budget for it, a monthly lunch at the local taco shop (~$70 for entire team or ~10 for just one person) is nice and can be a team building experience.
7. Likewise, free softdrinks and waters for the team (depending on the size) can cost around ~5K which might seem expensive, but is less expensive than a raise.
8. Stock options are a good but only when the company is doing well and the team believes in the vision. Otherwise this viewed as a cheap move by a company that has no cash.