Why Money Is a Bad

Motivator and What Works

Better
What Motivates Employees? (Hint:
It Isn't Money!)

For years, businesses have operated under the assumption that money
was the primary motivation for employees to remain with an employer,
dedicate themselves to the company's success and strive to produce
exemplary work.

Managers have dangled merit increases, bonuses and other financial

incentives in front of their employees in the belief that the pursuit of
money would result in greater productivity, reduced turnover, improved
product quality, better customer service and even lower rates of
absenteeism.
If money is such a great motivator, why are so many companies still
plagued by low productivity, high turnover, plummeting quality,
disappointing customer service and high absenteeism despite the
monetary carrots they have dangled before their employees?

The answer is simple: money is not the best motivator for most
employees.

1. Researchers at Gallup compiled a study based on employee

surveys, exit interviews and analyses of organizations and
business units. They found that money ranked fourth on the
list of the top five reasons that employees quit.
Money was a bigger issue for disengaged and actively
disengaged employees (15 percent and 13 percent
respectively). Money was also an issue among employees
who believed that their employer did not value them and those
 who felt that their coworkers were not handling an appropriate
amount of work.
2. The "SHL Workers and Good Management Study" asked
respondents what inspired them to work harder. The study
found that only 20 percent of the workers surveyed
reported that they found motivation in money and
bonuses.
3. Researcher Susan David conducted a study of business units
that had extremely engaged employees. When she asked the
employees what was behind their outstanding engagement
scores, only 4 percent mentioned pay.

Why Money Does Not Matter More

Naturally, employees are individuals who are motivated by different
things. Even the same employee can have motivations that change
over time. However, for more than 70 years, Maslow's hierarchy of
needs and its revised models have been used to demonstrate what
motivates people. The concept is typically illustrated as a pyramid with
five to eight tiers. Only after the needs defined in the lower tiers have
been met does the motivation for the next tier become relevant.
1. The bottom tier represents the basic physiological needs that
are required for survival. These include sleep, shelter, food,
warmth, air and water.
2. The second tier represents the desire to be safe. This tier
includes needs such as freedom from fear, protection from the
elements, law and order, stability and security.
3. The third tier includes the need to belong. It includes concepts
such as being part of a group, friendship, trust, affection,
acceptance and love.
4. The fourth tier covers the basic need for self-esteem. Esteem
needs include independence, self-respect, achievement,
respect from others, prestige and mastery.
 5. In the revised models, the fifth tier represents cognitive
needs. These include curiosity, exploration, the need for
meaning, knowledge and predictability.
6. The revised models devote the sixth tier to the need for
aesthetics. Needs include the search for and appreciation of
beauty, form, balances and similar concepts.
7. The seventh tier in the revised models and the fifth tier in
Maslow's original hierarchy are devoted to self-actualization.
Self-actualization involves self-fulfillment, realizing one's own
potential and pursuing personal growth.
8. The eighth tier in the revised models is labeled as
transcendence needs. It involves helping others to reach self-
actualization.

Reviewing the tiers, it is easy to see why some employees will not be
motivated by money. However, deciding what will motivate different
employees requires knowing your employees. To illustrate, a single
parent struggling to provide for a family while working an entry level job
may find money an effective motivator. However, as soon as he or she
is secure in the knowledge that the children have everything they need,
money will be less effective.

What Works Better than Money

In an ideal world, managers would know all employees well enough to
accurately predict what they need. In companies with more than one or
two employees, however, it is highly unlikely that the level of mutual
trust and openness will be sufficient for this to occur.
This does not mean that it is impossible to find the right motivations,
however. For all of their differences, humans share many common
needs and desires.

1. People want to feel that their work is

appreciated
Behavioral economist Dan Ariely has conducted numerous studies on
motivation. In one study:

 He gave participants a piece of paper containing random

letters and instructed them to find letter pairs.
 The amount of money decreased with every round.
 The first group had to sign their sheets and give them to the
experiment leader, who would look over the sheet before
placing it in a pile.
 The second group did not sign their sheets, and the
experimenter did not look over their sheets before placing
them in a pile.
 The third group's work was immediately shredded.
 The third group wanted twice as much money to continue
as the first group, and the second group wanted almost as
much as the third group.

The SHL study also found that having their work appreciated was a
great motivator. Approximately 17 percent of the respondents stated
that having the company acknowledge their work inspired them to
work harder.
Recognizing an employee's performance can be a powerful motivator.
A sincere compliment would work best, but even an acknowledgment
of the employee's efforts is better than silence.

2. People want to see the fruits of their labor

In another study, Ariely had participants build Lego characters.

 The pay declined for every character built after the first one.
 In the first group, the creations were placed under the table to
await disassembly when the experiment ended.
 In the second group, the creations were disassembled
immediately and in front of the participants.
 On average, the first group completed an average of 11
creations before quitting, but the second group only
averaged seven.

Although the participants knew that their creations would be

disassembled eventually, seeing the fruits of their labor for a short time
substantially improved their productivity. It gave them tangible proof that
their work had meaning.
3. People want autonomy
A study led by Greg A. Chung-Yan of the University of Windsor found
that the amount of freedom that employees have to handle a job their
way can significantly impact their performance. Although there are
some jobs that require strict compliance with a particular method or
approvals at every stage, many tasks can be completed in a variety of
ways. Allowing employees to choose the method that is most
efficient for them can be an effective motivator.

Employees who can use their own skill sets and creativity to succeed
are being motivated from within. Their success is directly tied to their
own initiative and talent, allowing them to have greater pride in the
results.

4. People want to be challenged

In the SHL study, 22 percent of the respondents stated that wanted
to take on more responsibility. In another study conducted by Dan

Ariely:

 He provided participants the materials to build their first

origami product.
  The first group received instructions, making their work easier
and their products prettier.
 At the end, the builders were asked how much they would pay
for the product, and the same question was posed to a group
who had only observed.
 The builders in the first group stated they would pay five times
as much as the amount stated by the observers.
 However, the second group valued their products even more
highly than the first group even though the observers
considered them less valuable.

The more difficult it is to perform a task, the more pride people feel when
they accomplish the task. Employees tend to tie the value of their work
to the effort they expended. Limiting employees to simple, easily
mastered tasks can rob them of their motivation to contribute to the
company and make them feel unappreciated.

5. People want to feel a sense of belonging.

A sense of belonging can come from being a member of a team,
contributing to the well-being of others or being a good fit for the
company culture.

In the SHL study, the motivation cited by most respondents — 26

percent — was the support of colleagues and workplace culture.

Adam Grant, a researcher, author and professor at Wharton College,

found that the sense of belonging can extend to a desire to help others.
In a study he conducted:

 He placed signs at a hospital's hand-washing stations.

 Half of the signs reminded nurses and doctors that hand
hygiene protected them from catching diseases,
 and the other half reminded them that hand hygiene protected
their patients from catching diseases.
 After measuring the amount of hand sanitizer and soap used
at each station, he found that 45 percent more was used at
the stations referring to patients.

In the Gallup study, employees who did not feel connected to the
company's mission or its leadership were more likely to quit than those
who felt connected.

Relationships in the workplace can be powerful motivators. Whether the

actions manifest as not wanting to let others down or a desire to do their
part for the greater good, a sense of belonging increases the
employee's happiness.

Specific Actions to Motivate

Employees
Just as employees are individuals, every organization is unique. This
means that not every approach is suitable for every situation.

However, here are some actions that can help motivate your
employees.

1. Be fair. Employees who perceive that you are "playing

favorites" are not going to be highly motivated.
2. Give employees sincere praise frequently. Let them know
that you appreciate the fact that they worked over the weekend
to conduct an inventory, for example, or that you found the new
format used for a report to be a great improvement.
3. Host company parties. Group activities can help build
camaraderie and promote a sense of belonging. Throw
monthly birthday celebrations for employees, host a company
picnic or organize a potluck luncheon.
4. Recognize the personal and professional
accomplishments of employees. Include a blurb in the
company newsletter, take the employee to lunch or just make
an announcement.
5. Find out what employees really want.Allow employees to
respond to a survey anonymously or put up a suggestion box.
Some employees might be motivated by flex time, others by
opportunities to cross-train and still others by increased
mentoring. Once you know what they want, you can decide
whether it is possible to provide the opportunities they prefer.
6. Take a genuine interest in your employees, especially in
their career goals.Discuss possible paths they can take to
move up in the company, for example, or inquire about their
progress if they are taking night classes to improve their skills.
7. Allow employees to take responsibility for their own
work.Make sure that they understand the goals, any relevant
deadlines and the quality of work they need to produce, but let
them decide on the order of tasks and the methods they use
to accomplish them.
8. Give employees the opportunity to prove themselves by
giving them special assignments that will challenge
them.If they succeed, praise them. If they fail, refrain from
 criticism; ask them what they would do differently next time or
similar questions that will allow them to identify their own
mistakes.

In conclusion, there are many ways to motivate employees, but for

most, money is a bad motivator. If you still doubt that fact, ask several
parents two questions.

1. Without a safety net or harness, would you walk across a 6-

inch board suspended between two skyscrapers for $1 million?
Most people will say that they would not take the risk.
2. Without a safety net or harness, would you walk across a 6-
inch board suspended between two skyscrapers to save your
child's life? Most parents would.

You see, despite the cynicism that has become increasingly prevalent
in modern business, there are simply some things that many people are
not willing to do for money that they would readily do for a different
motivation.

Knowing what your employees want is at the core of a good company

culture and workplace climate.
Resources
(1) https://news.gallup.com/businessjournal/106912/Turning-Around-
Your-Turnover-Problem.aspx
(2) http://www.incentivemag.com/Strategy/Engagement/Study--
Money-Not-a-Top-Motivator/
(3) https://hbr.org/2014/07/make-sure-your-employees-emotional-
needs-are-met
(4) http://www.simplypsychology.org/maslow.html
(5) http://ideas.ted.com/what-motivates-us-at-work-7-fascinating-
studies-that-give-insights/
(6) http://www.businessnewsdaily.com/75-autonomy-keeps-
employees-happy-study-finds.html
(7) http://www.nytimes.com/2013/03/31/magazine/is-giving-the-secret-
to-getting-ahead.html?ref=magazine&_r=0&pagewanted=all