Forget Bonuses: Why the World’s Best Companies are Focusing on Purpose and Autonomy

As traditional incentives lose their lustre, innovative leaders are tapping into deeper human needs to create truly motivated workforces.

The undercurrent of employee disengagement often finds its way to social media in the form of trends – from ‘quiet quitting’ to ‘tang ping’ or ‘lying flat’ in China. Disgruntled employees who “quit without quitting” are estimated to cost the US economy up to $550 billion a year.

The stakes are high: improved performance, reduced burnout, and workplaces that genuinely energize employees. Yet, motivating a demotivated workforce requires more than pep talks and stand-up meetings. It demands a nuanced understanding of employees’ challenges, aspirations, and potential growth trajectories.

Forward-thinking companies are moving beyond the tired playbook of bonuses, promotions, and punitive measures. Instead, they’re embracing a more sophisticated approach that recognizes the complex interplay of purpose, autonomy, mastery, and belonging. This evolution in thinking is reshaping the landscape of employee motivation, with profound implications for organizational success in the AI age.

The IKEA effect: cultivating ownership mindsets

IKEA, the Swedish furniture giant, isn’t just selling furniture—it’s selling experiences, a sense of accomplishment, and most importantly, it’s cultivating an ownership mindset among its employees.

In 2024, IKEA’s “togetherness” strategy has become a benchmark for effective leadership. The company’s company-wide “co-creation” program involves employees at all levels in product development and business strategy sessions. This isn’t mere lip service to engagement—ideas generated through this program have led to successful product launches and operational improvements.

When the COVID-19 pandemic saw in-store sales drop and companies raced to uplift their online experiences, IKEA transformed its shopping experience by keeping both customers and employees in mind. This made employees feel more ownership over their work.

This approach aligns perfectly with the cognitive bias named after the company—the IKEA effect. When people feel they’ve played a part in creating something, they value it more highly and become intrinsically motivated to see it succeed. Simultaneously, IKEA ensures clear paths for upward mobility, with nearly 90% of its managers hired from within.

As businesses grapple with unprecedented challenges—from AI integration to the ongoing impacts of remote work—IKEA’s success offers valuable lessons. It demonstrates how fostering a sense of ownership and purpose can be a powerful motivator in an era where traditional incentives are losing their effectiveness.

The motivation crisis: Understanding the new landscape

Before exploring solutions, it’s crucial to grasp the scale of the challenge. A 2024 Gallup study found that only 32% of U.S. employees felt engaged at work, with 16% actively disengaged (a 1% drop from the previous year).

Traditional approaches to motivation—largely based on extrinsic rewards and punishments—are proving increasingly ineffective in the modern workplace. This is particularly true for knowledge workers and in industries undergoing rapid technological change.

It is important to identify the unique factors within a company that could affect job satisfaction and engagement. While trends suggest that employees prefer remote working opportunities, an EY survey found that it takes more than just a fancy office to attract workers back. Employees are increasingly prioritizing higher-graded workplaces and strong organizational cultures.

Beyond perks: Tapping into intrinsic motivation

Leading companies in 2024 recognize that true motivation comes from within. They’re designing work environments and practices that tap into employees’ intrinsic motivators.

Spotify’s “Squad” model exemplifies this approach. By organizing employees into small, cross-functional teams with high autonomy – like miniature startups within the company – Spotify has created a structure that naturally fosters motivation. Squad members have the freedom to determine how they work, clear opportunities for skill development, and a direct line of sight to how their work impacts users.

In addition, Spotify had a “work from anywhere” model in 2021, which led to employee attrition dropping by 15% the subsequent year.

The results speak for themselves. Spotify consistently ranks among the top places to work globally.

Cisco’s holistic approach

Networking technology giant Cisco has maintained a stellar position in the Great Place to Work rankings (at #3 as of 2024). Their approach to employee motivation is not a one-size-fits-all solution but requires attention to various aspects of the employee experience.

From hybrid work to community outreach, Cisco takes a multi-faceted approach to fostering content and fulfilled employees. By investing in leadership development programs, fostering a culture of innovation and collaboration, providing continuous learning opportunities, and prioritizing employee well-being, Cisco has managed to maintain high engagement levels even during challenging times.

Salesforce’s focus on exceptional experiences

Like many companies, Salesforce identifies remote work flexibility as a key factor in defining “exceptional employee experience”. However, their research also highlights the importance of “a team that works well together” and “a sense of purpose in the work”.

This means building teams that work well together (in contrast with “hero culture” that restricts decision-making to a small group of executives). The company emphasizes building cohesive teams and valuing employee input, recognizing that nearly nine in 10 employees say their happiness at work is impacted by how valued they feel by their team.

The future of employee motivation

As we navigate the complexities of the modern workplace, it’s clear that employee motivation will continue to be a critical differentiator for successful companies. The examples highlighted in this article – from IKEA’s ownership mindset to Salesforce’s focus on synergy – demonstrate that there is no single solution to the motivation challenge.

Instead, forward-thinking companies are adopting multi-faceted approaches that address the diverse needs of their workforce. They recognize that motivation stems from a complex interplay of factors including purpose, autonomy, mastery, belonging, and well-being.

The most successful strategies share common threads:

• They tap into intrinsic motivation rather than relying solely on extrinsic rewards.
• They foster a sense of ownership and connection to the company’s mission.
• They prioritize flexibility and trust, recognizing the changing nature of work.
• They incentivise continuous learning and growth.
• They emphasize inclusivity and the ability for employees to bring their authentic selves to work.