Is Money the Only Motivator that Matters

It’s no secret that people want to be appreciated for their actions and recognised for their accomplishments. In a business context, appreciation and recognition are two key factors in driving personal motivation and engagement (or emotional commitment) with the organisation. Research has shown a direct correlation between employee engagement and profitability, sales and customer satisfaction. However, many organisations look at appreciation and recognition only in terms of financial compensation.

While it’s obvious that employees need to be paid for their work, compensation is just one component of a total rewards strategy. Some traditionalists say that getting paid is all the “appreciation” employees need. Others go a bit farther and offer additional cash bonuses, gift cards and cash equivalents when employees achieve their goals. Interestingly, when asked, most people say they prefer cash as a motivator. So employers are doing the right thing, right?

If money was the only motivator, you would just need to find the right monetary value, give people the opportunity to earn it, and then watch them succeed. Unfortunately, that’s not the way humans work. In fact, when it comes to employee rewards, having too many monetary options can send the wrong message — that a certain level of effort equates to a certain value.

An effective employee recognition program should therefore be delivered with the understanding that value is not just measured in money. Some of the most motivating rewards have much more to do with emotions than finances. These low-cost/no-cost options are typically the most under-utilised tools in the organisation’s total rewards toolkit: peer-to-peer recognition, manager-to-employee recognition, social sharing and public recognition, badges and gaming.

But where’s the proof?

In his book¹ just published in November, Dan Ariely, psychology professor at Duke University, describes an experiment he conducted to find out what kind of motivation really works. In it, four workers got one of three emails, each promising a different reward based on their accomplishments that day: 1) cash bonus; 2) a compliment from the boss; 3) a voucher for free pizza; 4) nothing (the control group). Details of the study can be found here (http://nymag.com/thecut/2016/08/how-to-motivate-employees-give-them-compliments-and-pizza.html), but the results were conclusive: the compliment drove the highest overall productivity.

Why?

According to Adam Grant, professor at Wharton, “A sense of appreciation is the single most sustainable motivator at work,” he said. “Extrinsic motivators can stop having much meaning — your raise in pay feels like your just due, your bonus gets spent, your new title doesn’t sound so important once you have it. But the sense that other people appreciate what you do sticks with you.”

When it comes to motivating employees, the most effective means are those that touch on their intrinsic drivers – doing something because they want to, not because there’s an external force in play. A rewards strategy including intrinsic motivators will not only create long-term employee engagement, but it will also minimise developing a cash culture. Win-win for both employees and employers.

¹Payoff: The Hidden Logic That Shapes Our Motivations.

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