It's all in the mind

PSYCHIC INCOME, as a tool for motivating people, may have already been abandoned.

- By Tony Samson

Has it been gradually replaced by the more muscular financial incentives like stock options, signing bonuses, tax shelters, housing allowances, and variable pay based on performance?

Psychic income does not at all involve money that can buy goods and services and a new car in the garage. (More than 40 cars is in another category.) Non-monetary incentives consist of psychological carrots like titles (executive assistant for secretary), ranks (vice-president for manager), or recognition memos for the 201 files (Your immense contribution to the success of our media event is a tribute to your selflessness in dressing up as a cactus, manning the company booth, and not charging overtime).

Psychic income can nourish the soul, even when the body is left with snacks. It can elevate status and encourage a constructive attitude towards work.

Still, when used as a substitute for real money, psychic income can invite cynicism. (You settled for that corny trophy after all you have accomplished?) Controlling compensation costs flat and substituting bonuses and merit increases with pats on the back may no longer work in the long run.