Years ago, as a CIO, I hired an engineer who wowed everyone in the interviews. In week three, I gave him a spot bonus. Just for showing up strong.

Six months later, he was the least engaged person on the team.

I thought I was buying loyalty. I was actually setting a price.

Here’s what I’ve learned since, and the research backs it up.

What the reward actually teaches

A reward is a signal. It tells someone what the company pays for.

Give it in week three, and the signal is muddy. The person can’t tell what they did to earn it. So the thing that gets reinforced is being new and being liked. Not the work.

Steven Kerr wrote about this back in 1975. He called it rewarding A while hoping for B (Kerr, 1975). You want output. You paid for arrival.

It’s like tipping the waiter before the food comes out. You just told them the tip has nothing to do with the service.

The motivation problem

Most people who take a job they wanted show up already motivated. They like the work. That’s the asset.

Then you pay them extra for it. And something shifts.

Deci, Koestner, and Ryan (1999) pulled together 128 studies on this. Expected, tangible rewards reliably lowered people’s own interest in the task. Feedback did not. Praise for something specific did not.

So the new hire who chose the job for the work is exactly the person an early bonus hurts most. “I do this because I care” quietly becomes “I do this because they pay me for it.”

That’s a worse deal for you, not a better one.

You just raised the baseline

There’s a second cost. The reward becomes the floor.

Gneezy and Rustichini (2000) found that small payments produced worse performance than no payment at all. Money turned a social relationship into a transaction. And once someone has a reference point, anything below it feels like a loss.

Think of it like giving your kid dessert before dinner every night for a week. Then you stop. Dinner didn’t get worse. But it feels like punishment now.

Your tenured people notice too. They watch a newcomer get rewarded before contributing and quietly dial back their own effort. I’ve seen it. Nobody says a word. The Slack replies just get slower.

What actually builds a strong new hire

Let me break this down.

New hires spend the first few months building two things: knowing what their job actually is, and believing they can do it. Bauer et al. (2007) looked at 70 samples of newcomers and found those two variables predict later performance and whether the person stays.

Rewards don’t build either one. Feedback and manageable challenge do.

Here’s the thing. When rewards are tightly tied to what the person did, they work fine. Cerasoli, Nicklin, and Ford (2014) found that incentives tied directly to performance predict quantity, and inner motivation predicts quality. The two play well together. But that only holds when the reward is contingent on something. An early reward, by definition, isn’t.

One honest caveat. Nobody has run a study that directly tests reward timing during onboarding. The case here is built from adjacent research, not a head-to-head trial. I believe it because I’ve lived it. Take that for what it’s worth.

The Burnout Connection

Burnout isn’t tiredness. It’s a broken relationship between a person and their environment. Early rewards start that break on day one. The new hire learns their value is set by someone else’s checkbook, not by what they can do. Then normal pay feels like a demotion, and effort feels like a bad trade. That’s the exact math that grinds people down over years.

Your First Move

Here’s what matters in the first ninety days:

👉 If you’ve already handed out the early bonus, make the next one earned. And say so out loud.

I work with leaders on exactly this kind of thing. If your reward system is teaching the wrong lesson, grab a slot at https://book.drdegnan.com, and we’ll fix it.

References

Bauer, T. N., Bodner, T., Erdogan, B., Truxillo, D. M., & Tucker, J. S. (2007). Newcomer adjustment during organizational socialization: A meta analytic review of antecedents, outcomes, and methods. Journal of Applied Psychology, 92(3), 707 to 721. https://doi.org/10.1037/0021-9010.92.3.707

Cerasoli, C. P., Nicklin, J. M., & Ford, M. T. (2014). Intrinsic motivation and extrinsic incentives jointly predict performance: A 40 year meta analysis. Psychological Bulletin, 140(4), 980 to 1008. https://doi.org/10.1037/a0035661

Deci, E. L., Koestner, R., & Ryan, R. M. (1999). A meta analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. Psychological Bulletin, 125(6), 627 to 668. https://doi.org/10.1037/0033-2909.125.6.627

Gneezy, U., & Rustichini, A. (2000). Pay enough or don’t pay at all. The Quarterly Journal of Economics, 115(3), 791 to 810. https://doi.org/10.1162/003355300554917

Kerr, S. (1975). On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18(4), 769 to 783. https://doi.org/10.5465/255378