Learn about the flaws and key links behind Money Motivation backed by scientific research. Why it doesn't always work, and find out how to better use money to motivate people.
Money. We all want more of it. But, does money motivation actually work? And, if it does, then, to what end? While the old saying "money can't buy happiness" rings true, it still doesn't stop us from making decisions based on obtaining more money to have more money to spend. Workplaces all over the world, for instance, still use money as a currency to attract skilled and experienced candidates to job interviews. This is because, money in and of itself, is a type of motivational driver that has the power to get people’s attention and to encourage them to want to know more.
Let’s do an experiment right now, you and I.
Imagine, in front of you are two job offers. The first is an annual salary for $1 million dollars. The position gives you the freedom to work autonomously. The work provides plenty of fulfillment and is a perfect fit with your passions and area of expertise. Plus, you’ll be working with a great team of people who are committed to the same vision.
“Sounds great,” you say but, what about the other offer?
The other job offers an annual salary of $1.5 million dollars. You’ll have to regularly report to a group of hard-bitten stakeholders. The work will fit your area of expertise but will neither be fulfilling nor align with your passions. And, the team supporting you doesn’t seem to want to show any sort of commitment to the vision.
Which offer would you take?
Money Only Goes So FarUnderstandably, deciding between the two job offers can be difficult. But, ultimately, the choice comes down to whether you accept the $1 million or, the $1.5 million salary. Keeping in mind, of course, all the other job aspects that would affect your day-to-day. Some would argue that anyone in their right mind would go for the extra $500k. Others would argue — “it wouldn’t be worth it.” Either way, the question is: does money motivation in this predicament exist?
Carinne Piekema's post on BBC, aims to address the matter. Piekema's post discusses whether money really motivates people in the workplace. In the post, Piekema states that claims of hefty pay packets to improve performance is a "separate and testable assertion." She goes on to further state that, in organizations, 'performance-based' pay has become “so deeply ingrained that few people question it” suggesting financial rewards for achieving a high-level of performance have become almost expected.
Drawing upon the body of research on intrinsic and extrinsic motivation by, Professor of Psychology at the University of Rochester, Edward Deci, the links between money, motivation, and performance become clear. Deci’s research highlights findings that show, ‘an over-emphasis on financial rewards can in fact significantly undermine autonomy and therefore one's motivation.’ In other words, focusing on money can in fact negatively affect a person's motivation.
Dan Ariely, the author of Payoff, agrees with this finding making the sentiment that ‘large financial rewards can actually undermine people’s ability to perform well.’ Going back to our two job offers earlier, between Piekema, Deci, and Ariely’s findings, it's safe to say that the extra $500k salary on offer could eventually prove to inhibit your motivation as opposed to fostering it. But is there more to it?
Money Motivation and Key LinksDeci’s pioneering work on motivation has led the way examining, in particular, the key links between money and motivation. Deci's research has discovered that people have three psychological needs:
These are, to feel...
- Competent and,
- Related to others
Take, for example, the case of Manchester United midfielder Henrikh Mkhitarya who was put under scrutiny for his club transfer over a larger paycheck. Despite the $32.5 million contract, Mkhitarya made clear to the public the transfer was to do with more than just money. “I was always taught by my father to challenge myself and to continue to evolve in my career, and I saw the move to Manchester United as an opportunity to grow as a player and as a person,” he told the International Business Times.
The same can be said for football coach Paul Cook who dismissed the notion that his players were at Pompey for "Payday." Cook went on to state that money was not the motivating factor driving his players further stating to the media that his players are more interested in making a name for themselves. Now, what about you? What are you psychological needs? Have you ever stopped to consider what’s most important to you when looking ahead to your future?
Money Motivation in the WorkplaceWhat about money motivation and the workplace? Motivating employees with money is a classic and problematic proposition. Offering more money in exchange for harder work, longer hours, and better outcome isn’t always the best motivator (anyone who’s worked a 12-hour shift could tell you that!) Yet, it’s a tactic many employers still use to attract, keep, and get the most out of their employees.
The problem is, money motivation becomes ineffective when it enforces more rules and bureaucracy. Processes get in the way of creativity and productivity. Hierarchical structures form. Complexity arises. The lines of responsibility blur. And, communication gets lost in translation. As a result, such changes often lead to a lost sense of employee autonomy which can negatively affect motivation. Usually, when this happens, people lose what motivated them internally—such as the very meaning they attached to their work which can eventually lead to a lack of engagement and fulfillment.
A Better Way to MotivateIn many respects, money motivation is only a temporary solution to a much larger challenge employers face. Raising salaries and increasing bonuses will only go so far. To get the very best out of people, it’s important to understand what intrinsically motivates them. Why it motivates them, and how you can appeal to those ulterior motives.
“We are more inclined to deliver our best performance when we feel like our boss or employer actually cares about our success and well-being,” Heather Morgan writes in a post published on AOL. People like to feel as if their work matters, that they themselves matter, they’re part of a team and that they’re working towards something that’s meaningful.
High-performing organizations understand the importance of intrinsic motivation. They are the organizations who care about their people, believe in a person's value and potential, and ensure that their people feel part of a team and that their work matters. These are the type of organizations you want to be a part of.
See also: How to Motivate Yourself and KEEP Yourself Motivated.
Find a Balanced MediumMoney can and does motivate people. Organizations all over the world use financial compensation, remuneration, and rewards to motivate people. And, to an extent, it works. The solution, therefore, would not be to completely remove extrinsic, monetary type of rewards. Instead, it should be to find a more "balanced" view between extrinsic and intrinsic motivation suggests Murayamaa, Matsumotob, Izumab, and Matsumotob in their findings published in The National Center for Biotechnology Information.
If you can find an organization that fulfills your psychological needs while still paying what you’re worth (and what you need to live a good life), then you’ll have more than just money to motivate you. If, however, you’re looking for more—learn how to motivate yourself so you don’t have to depend on money as your motivator. As the great philosopher, Confucius once said:
“Do a job you love and you will never have to work a day in your life.”