Pay and Bonuses Don’t Buy Creativity - Study

An open, supportive and stimulating workplace is more important than pay or bonuses in driving the success of fast-growth small-to-medium enterprises, a new study has found.

The study 'Drivers of learning orientation in fastgrowth SMEs' by RMIT University, surveyed 253 owners, founders and CEOs of Australia’s fastest-growing SMEs and found workplaces that encouraged open communication, experimentation and risk-taking among employees were more learning oriented – a key factor that differentiates fast-growth companies from those that fail to grow.

Lecturer in entrepreneurship at RMIT, and lead investigator of the study, Dr Carol Tan, said that learning-oriented firms were more competitive because they could respond quickly to changing markets and unpredictable events, readily discarding old competencies and developing new approaches.

“Fast-growth SMEs are the high-power engines of our economy, comprising only 3 to 10 per cent of firms but generating up to 90 per cent of employment growth,” Tan said.

“These companies are not just the most innovative and creative, they’re also the most learning oriented.”

The research by Dr Tan, Professor Kosmas Smyrnios and Lin Xiong in RMIT’s School of Management showed there was no significant relationship between reward-related human resources practices and learning orientation.

“Our study showed that providing financial incentives linked to performance does not motivate staff to learn – money can’t buy creativity,” Tan said.

“Instead, we found an open workplace culture, where staff can experiment, take risks and question fundamental beliefs and work patterns, is critical to learning.”

Tan said that leaders needed to act as role models, stimulating employees intellectually, providing a road map, and focusing on creating the supportive environment that will build a truly learning oriented enterprise and drive their firm’s success.

“Benefits and bonuses have their role, but they do not necessarily mean employees are committed to learning or to the goals of the venture,” she said.

“In contrast, our study indicated that learning orientation in a firm is only enhanced when high levels of motivation are maintained and employees are treated as valuable resources.”
 

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