Money – Motivator or Demotivator?

Whenever I discuss the topic of motivation on training courses, the response is often ‘Yes, money is a motivator’.  I then say ‘Okay, with my magic wand I will ensure that you all have a 50% pay increase from tomorrow’.  Pleased looks all round.  Now I ask ‘Will you work 50% harder or faster or more efficiently? No, you will just be 50% less dissatisfied with all the things about your job that irritate or annoy you’.

For almost 100 years, psychologists of all persuasions and scientific management ‘gurus’ have been trying to establish once and for all whether money is a motivator or a demotivator or a neutral factor.  Over that 100 years, the nature of work has changed considerably and organisations no longer pay people in terms of the number of widgets they produce per hour but the mentality that goes with that system is still around.  Call centres are the classic example where employees are paid for the number of calls they answer per hour not on the number of satisfied customers or resolved problems.

Some of the key questions are:

• Does money make our job more enjoyable?
• Does money buy engagement?
• Does money make us work harder or faster?
• Does more money produce better results?
• Does satisfaction with pay vary with cultures round the world?

So what role does money play since the research shows that the answer to the 5 questions above is no?  And what does motivate and engage people at work?

The answer to these questions is complex and different in different situations because (and here’s a surprise!) people are complex and different.  However, there are certain basics that emerge from all the research:

• People whose primary focus is on what they are paid exclude themselves from being able to enjoy their jobs
• People who don’t like their jobs free that part of their brain to focus on money
• People who like their job focus on their work and the satisfaction that brings rather than the money
• There is no link between motivation, engagement and salary levels (i.e. even lower paid workers exhibit the same tendencies as higher paid)
• Financial incentives don’t affect people’s motivation when what they are doing is stimulating and using their ‘human’ skills
• Financial incentives increase people’s motivation when the task is boring and repetitive but the effect is limited
• The more people focus on their salaries, the less they will focus on satisfying their intellectual curiosity, using their experience, learning new skills – the very things that make people perform best
• The relationship with money is psychological – people’s tendency to think or worry about money is on a continuum with marked differences, and different people value money for different reasons (e.g. power, freedom, security, material possessions)
• Financial rewards based on the pursuit of power, self- aggrandisement, or overcoming self-doubt are less effective as a motivator than when based on intrinsic issues such as self-improvement, family support, and leisure time

These results have important implications for senior management: if organisations want an engaged workforce, money is clearly not the answer. In fact, if they want employees to be happy with their pay, money is not the answer.  In summary: money does not buy continuing motivation or engagement.  If organisations want to motivate their employees, they need to understand what their employees really value — and the answer is bound to differ for each individual.  And whilst personality (stable, extraverted, conscientious, agreeable) is a much better predictor of engagement and motivation, the biggest organisational cause of disengagement is incompetent leadership. So the way management behaves and the personality of managers will have a significant impact on whether employees are motivated and engaged at work or not and organisations need to design job and responsibilities which match the skills, experiences, personality and desired level of intellectual challenge of the individual employee.

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