Do money and job satisfaction really motivate employees to be productive in their jobs? We hear that better pay motivates employees to be more productive. We also hear that “happy employees are productive employees.”

But is there any truth to these sayings or are they just fictional beliefs? Anyone who has ever taken a course in social science has discovered that common sense beliefs are not always validated by scientific research. In some cases, common sense beliefs are just plain wrong. Take “opposites attract,” for example. This is untrue. An overwhelming amount of research indicates that we tend to be attracted to people who are similar to ourselves. Thus, “birds of a feather flock together” is true; but “opposites attract” is false.

Most successful entrepreneurs say that their primary motivation has been to build something lasting, not to make a lot of money. Certainly great professional leaders like Marvin Bower, who built McKinsey & Co., John Whitehead, the former Goldman Sachs senior partner, and Supreme Court Justice John Paul Stevens would tell us that their motivation came from the work itself, and that the lasting respect of others was far greater than money as a measure of accomplishment. And very few great artists are in it for the money. Money is a by-product, and usually a secondary one at that, for such achievers.

There are many reasons why financial rewards as employee incentives are becoming less effective:

Loss of value – An annual bonus just comes with the job for some employees – it’s expected and often included in a company’s benefits

Demotivating – Employees usually have to wait until the end of the year to receive a bonus, meaning any impressive work they’ve done mid-year can’t be rewarded in the same way and at the appropriate time

Low impact – A financial bonus is often just transferred into the employee’s monthly pay packet, rather than presented to them, and is quickly swallowed up in daily outgoings. The feel-good factor a bonus gives can be short-lived or lost, as a result

Impersonal – A financial bonus is generic and unimaginative. Staff often receive the same amount of money at the same time, so might not feel individually appreciated

Organisations should get a bit more creative if they want their employee incentives to make staff feel valued and appreciated – and get the most out of them in return.

Other Employee Incentives Aside Money

Now before I incur the wrath of many, let me explain: lack of money is a de-motivator, but money is not a motivator. Employee behaviour is also very complex. When we ask whether or not money is a motivator, we are asking a very broad question that makes predicting behaviour difficult. Money is a motivator to an extent. I enjoy my work, but let’s face it…how many of us would keep doing our jobs if our employers were no longer able to pay us, but asked us to stay on as full-time volunteers?

Offering employees, a range of tangible rewards like tablets and smart phones, sports equipment like golf clubs, or shopping and jewellery vouchers can have a greater impact on employees. Rewards like these can act as employee incentives that make staff feel highly valued and appreciated for longer – each time they use their smart phone they’ve been rewarded they have positive thoughts about work.

Emotional sources of motivation are more powerful, and they are best conveyed informally in an organization through the respect of peers, the admiration of subordinates. It is estimated that only 13 percent of employees worldwide are engaged at work.

Unlike a financial bonus that’s just transferred into a staff member’s bank account, the employee can be presented with their reward like at work and in front of their team. This highlights their achievements to other employees, while demonstrating what can be achieved if they work hard too.

Employee engagement comes from feeling valued and appreciated, knowing your opinion matters, and being clear on what contribution you make to the overall success of the organization. Driving employee engagement is most critical at the immediate supervisor level, because an employee’s relationship with her supervisor dictates job satisfaction more than any other factor.

Similarly, feelings of relatedness and fairness are motivators. They are determined more by informal interactions, social networks and daily perceptions than by money or formal promotions.

People are also motivated by having autonomy, but more money doesn’t often equal greater perceived autonomy. In fact, you usually have to give up autonomy to rise up the compensation ladder. The real heart of autonomy as a motivator, however, rests with the perception that you are executing your own decisions without a lot of oversight or rules, which is hardly common in the corporate world today.

How can you find out what motivates your employees? Here are three ways.

  1. Pay attention; when you pay attention to what people talk about, what they are interested in, and what they focus on, you can often get a sense of what naturally motivates them.
  2. Ask questions; it’s important to engage employees and find out what you could do to encourage them to stay motivated on the job.
  3. Figure out what demotivates someone and stop doing it! It’s not so difficult. If you know someone hates to be nagged, talk with them about the way they would like to be approached when there are things to do. If you know that someone gets embarrassed easily, try not to put the person in uncomfortable situations.

People universally crave respect, peace of mind, success, recognition, financial stability, admiration, and love. These are the motivators that stick—the ones that can spur people to work harder, take risks, and change behaviours. Find out what really motivates your employees and you will be able to create win-win outcomes, for them and your business.



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