Keeping Your Employees Happy Isn't Always About Higher Pay -- Here Are 6 Alternatives Happy employees are productive employees.

By Justas Markus

Opinions expressed by Entrepreneur contributors are their own.

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It often takes a small fortune to find someone who's truly great at what they do.

Yet, many business owners make the mistake of not treating their employees right -- and then they pay dearly for it.

Related: Most Employees Hate Their Career Path. Here's How to Help.

There are many reasons why employees leave their companies. Maybe they are overworked, or maybe they can't stand being micromanaged, or maybe they simply don't feel challenged enough. One way or another, a valuable employee leaving incurs a tremendous cost, since then you have to spend resources on finding and training his or her replacement. So, how can you ensure that this doesn't happen to you?

Below you'll find six ways to show your employees your appreciation and keep them happy.

Verbal praise

A fascinating experiment was conducted by Dan Ariely in an Israeli semiconductor factory. Workers were told productivity targets and then allowed to choose between a voucher for free pizza, a $30 cash bonus or a compliment from a boss in exchange for hitting their goals. Which group turned out to be most productive? The one that received a compliment as a reward!

It sounds counterintuitive, but it seems that a lot of employees prefer verbal praise over gifts and cash, which means that it should be your go-to employee recognition tactic. How often do you verbally acknowledge the great work that your employees are doing?

Related: Employees Are Still Dissatisfied -- Here's What You Can Do About It

A lot of managers feel weird about giving compliments and avoid praising their employees, which leads to problems. Think about it: If you don't acknowledge the good things, but tell people off for their mistakes, how does that make them feel? Employees who feel unappreciated are much more likely to leave your company than ones who feel valued and respected.

So, next time someone performs well, give them some praise. It's even better if you acknowledge him or her in front of the entire team (remember, praise in public, scold in private!).

Non-monetary gifts

Another interesting takeaway from the previously mentioned study is that people seem to prefer non-monetary gifts over cash bonuses. Seriously, who could have guessed that employees would be more motivated by a pizza voucher than by $30, with which you could buy two pizzas?

But, it shouldn't be so surprising. There's plenty of research showing that cash bonuses don't really work.

And people are indeed more motivated by gifts. A study by Swiss and German researchers revealed just that. "The researchers found that gifts were far more motivating to short-term employees than unexpected cash bonuses, effectively paying by themselves with productivity," explains Ray Fishman in the Harvard Business Review.

So, use gifts to show your appreciation. They don't have to be expensive. Things like pens, stationery and books make great gifts. Or, if you want to spend a little bit more, watches are still a popular choice.

It also doesn't have to be a physical thing, either. You can always use services like Tinggly to give an experience (which allows you to gift experiences from making gelato in Italy to exploring a volcano in Hawaii). Or, you can gift someone software or digital products by giving them an AppSumo gift card (AppSumo is like a Groupon for entrepreneurs and features discounts on various tools and resources). This is especially useful when your team is remote and gifting intangible gifts is easier than shipping physical items.

Related: 10 Tips to Motivate Employees Without Resorting to Money

Constant challenge

Have you considered that the reason an employee might be underperforming might simply be that he or she is bored?

You want smart people to work for you, right? Well, here's the thing about smart people: They need constant intellectual stimulation. It's great when an employee constantly breezes through the tasks that you assign to them. But, have you considered that they might be getting bored after a while?

How can you provide just the right amount of challenge? According to research from the University at Buffalo School of Management, employees are turned off by goals they see unrealistic, but motivated by small wins and challenging, incremental goals. So, make sure that you set goals that are realistic but still make your team stretch a little bit. That way, you'll prevent your employees from twiddling their thumbs, and keep them constantly engaged.

Optimal work environment

Have you ever wondered why companies like Facebook and Google spend millions upon millions of dollars on their work environment?

A shabby work environment can really be a demotivator to even the most motivated employees. Your employees probably spend at least eight hours a day in their workplace. What are they surrounded with?

Related: Note to Startups: Employees Are Happiest When Leaders Have a Moral Compass

An easy way to show your employees that you appreciate them is to provide a work environment that is pleasant to be in: clean, comfortable and with plenty of opportunities for recreation.

Is the office clean? Are their chairs comfortable? Do they have all the tools that they need? Are the computers up to date? Is there a kitchenette? Are there snacks? Is there a recreational area? You get the idea.

It has also been shown that employees are happier in a workplace environment over which they have some degree of control. For example, at Facebook, employees can adjust their own desks based on personal preference, and teams can use whatever workspace layout they see fit for their project. All this leads to higher work satisfaction, so don't hesitate to give your employees more autonomy when it comes to their work environment.

Company retreats

Did you know that Buffer organizes company retreats three times a year and one year Buffer spent $111,874 on a company retreat in Sydney that hosted 26 people?

You might be wondering why a company that prides itself on being lean would spend so much money on something that is seemingly non-essential.

Well, in a company blog post entitled "Why The Buffer Team Goes on Multiple International Retreats Every Year," Buffer co-founder and CEO Joel Gascoigne explains that, among other things, it allows them to meet each other in real life: "There's something magical that happens when you meet in person. In a retreat setting it's even more powerful. We have casual meals together and do activities on off days. We can learn about what makes each other tick and what our true passions are."

Related: 4 Secrets to Making Your Company a Happy Place to Work

Buffer is not alone. ConvertKit organizes company retreats. So does Automattic. So do many other companies, both local and remote ones.

Company retreats are a great way to get some work done while also relaxing, getting to know each other better and doing fun activities.

All this helps employees bond with each other and promotes a positive social environment and a company culture where people are not only coworkers, but also friends. Plus, a company doing something fun like that makes employees feel more appreciated!


According to a study from Korn Ferrry, 63 percent of employees would prefer to get a promotion with no raise than a salary increase with no promotion.

Your employees need to feel that they have a direction and that they are advancing in their careers. Are you promoting your employees on a regular basis based on their performance?

When employees are aware that their efforts are being monitored and rewarded, they will be much more likely to go that extra mile. So, make sure that they know that there are opportunities for those who work hard and produce results.

Ask yourself, would you want to work in your company? Would you be happy with the workplace environment, social atmosphere and career opportunities? Would you feel that your efforts were recognized and your contribution appreciated?

You have to treat your employees right if you want them to stay. Make sure that they feel valued and appreciated. Then you'll have happy employees -- and happy employees are productive employees.

Related Video: The Secret to Being Happy

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Justas Markus

Marketer, Blogger & Entrepreneur.

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