Money Motivates!

23 Nov

Money as a Motivator: Ideas

Money awards are effective;

  1. Money motivates people, and extra money motivates people to work extra
  2. Employees compete to raise productivity or standards
  3. It is not always possible to promote people, so money is a simple way to reward workers
  4. Money is acceptable for all workers – some may not appreciate a particular present, or some gifts may be insulting

Money is only sometimes effective, or sometimes does not work:

  1. If employees are highly paid, money may not be sufficient. They may prefer other benefits, such as an award ceremony or dinner, a club membership, a travel ticket, a car, a window office, etc
  2. Money may set employees against each other, leading to conflict in the office
  3. It may be difficult to determine the standard or basis for the decision to award the employee
  4. Employees may feel forced to compete

Money is not effective:

  1. Employees work for a salary – they do not want to perform like circus animals if paid more
  2. Money trivializes work, which for many professional employees should be its own reward
  3. The amount may not bear relation to what the employee does
  4. If the employer finds it motivating to award money, perhaps the salaries are too low
  5. There are many other ways to motivate employees


Behavioral scientists tend to downplay money as a motivator.They prefer to emphasize the importance of challenging jobs, goals, participative decision making, feedback, cohesive work teams and other non monetary factors. We argue otherwise here – that is, money is the critical incentive to work motivation.

Money is important to employees because it’s a medium of exchange. people may not work only for money, but take the money away and how many people would come to work? A study of nearly 2,500 employees found that while these people disagreed over what was their number – one motivator, they unanimously chose money as their number – two.

As equity theory suggest, money has symbolic value in addition to its exchange value. We use pay as the primary outcome against which compare our inputs to determine if we are being treated equitably, that an organization pays one executive $ 80,000 a year and another $ 95,000 means more than the latter’s earnings $ 15,000 a year more. It’s a message, from the organization to both employees, of how much it values the contribution of each.

In addition to equity theory, both reinforcement and expectancy theories attest to the value of money as a motivator. In the former, if pay is contingent on performance, it will encourage workers to generate high level of effort. Consistent with expectancy theory, money will motivate to the extent that it is seen as being able to satisfy an individual’s personal goals and is perceived as being dependent upon performance criteria.

However, maybe the best case for the money is a review of studies that looked at four methods of motivating employee performance:  money,goal setting, participative decision making, and redesigning jobs, to give workers more challenge and responsibility. The average improvement form money was consistently higher than with any of the other methods.


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