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5 Reasons Motivating with Money Doesn't Work
Uncover what employees really need to succeed.
Posted Apr 3, 2015
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One definition of insanity is continuing to do the same thing in the same way, but expecting a different result. With that in mind, in a time when employee engagement is the lowest it has ever been, why are we still trying to motivate with money when it clearly hasn't been successful?

While we all love a good gift card, it's unclear why organizations continue to spend countless dollars trying to motivate and engage their staff with monetary incentives if we know it doesn't work.

In his best-selling book Drive, Daniel Pink explores three fundamental motivators: autonomy, mastery, and purpose. He explains that all people are motivated by at least one of these and often a combination of the three. It is interesting that money is not on this list. Pink asserts that while people are initially motivated by money, if you pay them enough to meet their needs, money becomes less and less effective.

Following are five reasons money doesn't motivate:

  • Incentives and threats don't work. You can't make someone motivated. Sure, you can threaten them or offer incentives, but then what? Do you keep threatening and incentivizing? At some point, you have to make good on the threats and provide additional incentives. Even at their best, these strategies only work 20 percent to 25 percent of the time.
  • You can't motivate people. All you can do is provide an environment where you can tap into what already motivates them. Is it praise, recognition, serving a greater purpose, becoming a subject matter expert, or something entirely different? A motivator will not motivate if what's being offered is not important to the individual.
  • Money can't buy engagement. It is estimated that only 13 percent of employees worldwide are engaged at work. 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.
  • Money might not make better leaders, but leadership development can. If the manager relationship is so critical to employees' success, why aren't more organizations investing in leadership development instead of Starbucks gift cards? Investing in the right leadership development program for your managers and salespeople with high potential can provide a significantly higher ROI.
  • Common sense isn't always common practice. Demonstrating appreciation, developing team members, and ensuring employees are clear about their roles and responsibilities improves productivity, morale, and engagement. So why aren't we spending more time and money doing that? Because sometimes it's just easier to give a $25 gift card. Creating a motivational climate takes time, effort, and energy. It has to be a deliberate effort.

I'm not suggesting that money should never be used as a motivator. Some people perform best with bonuses and incentives—but not everyone does. Some people crave opportunities for advancement, some thrive on recognition for a job well done, and some desire the opportunity to work on a flexible schedule. Spending time trying to identify what motivates your employees and then finding meaningful ways to make those things happen might not be the easiest strategy, but it is consistently more successful than rewarding with money. And it can bring lasting results.

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

1. Pay attention. If 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. It may seem obvious, but when was the last time you asked people what you could do to help them stay motivated?
3. Figure out what demotivates someone and stop doing it! It's not rocket science. 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, make an effort 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 behaviors. Find out what really motivates your employees and you will be able to create win-win outcomes, for them and your business.


Anne Grady is an author and an expert in corporate leadership and personal and organizational transformation. Her new book is 52 Strategies for Life, Love and Work. For more information, visit www.AnneGradyGroup.com.


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