Money as a motivator

Abstract

Where do you stand on the issue of money as a motivator at work?

• 1. For: Money is an effective, powerful and simple motivator. Self-evidently, money motivates and extra money motivates people to work extra hard. It’s natural to compete, and when rewarded with money for better work then productivity and standards are raised for all. Further, because it is not always wise or indeed possible to promote individu-als, money can be used as an equitable and very acceptable way to reward all workers. More important, because money is a “generalized reinforcer” it is always acceptable to all people everywhere and at all times. Money talks, and it talks loudly and clearly.

• 2. Equivocal: Money sometimes, but not always, motivates. For those who are very well paid, even quite large amounts have a minimal motivational effect. Worse, money rewards can and do set employees against one another, leading to conflict, disharmony and reduced teamwork. It leads as much to a win-lose as a win-win philosophy. Also, it is very difficult in many jobs to determine or measure an individual’s work performance accurately and equitably to decide how much money to award.

• 3. Against: Money is not effective and only has the power to demotivate. Money actually trivializes work: it turns those who are intrinsically motivated at work into extrinsically motivated workers. Money rewards (bonuses, performance-related pay) may bear little relation to what the worker does, or feels. If money works and is so motivating, perhaps the base salaries are too low. There are better ways to motivate people, other than cold cash. It is a naive nonsense to believe that if a person’s salary is increased by, say, 20 percent this will generate a 20 percent increase in his/her productivity (or even morale).