Why Money Isn't Enough to Motivate Your Team Members | Entrepreneur (2024)

Opinions expressed by Entrepreneur contributors are their own.

Reprinted from The Meaning Revolution: The Power of Transcendent Leadership © 2018 by Fred Kofman. Published by Currency, an imprint of the Crown Publishing Group, a division of Penguin Random House LLC.

The Gallup organization did the most extensive empirical research ever carried out on the subject of productivity and engagement. It examined over 400 organizations, interviewing a cross section of 80,000 managers, and about 2 million surveys. Using performance measures such as sales, profits, customer satisfaction, employee turnover and employee opinions, they distinguished between bad and good workplaces.

Related: 6 Ways to Motivate Individuals to Become a Winning Team

The first and second job experiences of the daughter of a friend of mine, a millennial just out of college, illustrate the Gallup research. The woman -- let's call her Amy -- first held a job for about six months in telesales at a software firm. She didn't care about the business, and she knew it wasn't a career job, but she took it to pay the rent. She was paid $20 per hour plus bonuses for meeting or surpassing her quota. Her job was to cold-call people who had previously used the company's software to sell them a new product. The job had nothing to do with Amy's desires or talents; she was just a cog in a machine.

Amy didn't really know what the point of her work was, other than pushing the company's product -- which she had never used. She didn't know how this product would benefit the customers; she just parroted her scripted sales pitch in a skull-numbing litany hour after hour. She only knew that if she met her sales quota, she'd get a reward, but if she failed to reach them two months in a row, she'd get fired.

"My manager never praised me, only criticized me," Amy complained. "I never seemed to do anything right. I was stressed out all the time. I didn't have the tools I needed to do my work well. And I didn't want to ask, as I saw that when any of my teammates asked for help they'd get in trouble. I just put my head down and did whatever I had to do. I hated the job, my boss, my coworkers; and after a while, I began to hate myself."

Related: Money Is Nice, But It's Not Enough to Motivate Employees

To the great relief of her parents, Amy quit that awful job; and to their great delight, found a new one where she feels totally engaged. She now works at an organization that connects people from the same neighborhood online. She believes that this organization is committed to achieving something good in the world. She feels grateful to participate in a noble purpose in the company of people who support her. She understands how her efforts fit into the big organizational picture, and she knows that her work touches many lives for the better.

Amy knows what's expected of her and is trusted to deliver it without being micromanaged. She has quite a bit of flexibility and autonomy regarding how she does her job and coordinates her efforts with her coworkers. She knows her manager is there to support her and to help her grow. The manager is always available and often asks Amy if she needs any tools, materials or training to do her job better every day. Periodically, he'll engage her in a career conversation, encouraging her to plot a course that makes the best use of her talents and passions.

Amy gives her best, and her manager acknowledges her efforts with generous praise. Amy feels useful and tuned in to the work that best fits her. Everybody around cares about her, too. Some of her best friends are her coworkers. She's helping them and watching them thrive, and vice versa. If there's any disagreement among the members of Amy's team, they discuss the situation, trusting that their collective intelligence will lead to a wise resolution that integrates everybody's needs and perspectives.

Related: 4 Innovative Ways to Motivate Your Team

Amy feels that she is part of an extraordinarily high-performance team, where everybody is committed to doing a quality job. She's proud of what she does, how she does it, what she does it for and with whom she does it. Changing jobs or retiring is not even a remote consideration in her mind; she wants to rise in the organization to help it thrive.

According to a 2014 study of 300 companies, 94 percent of millennials want to use their skills to do good in the world. More than 50 percent say they would take a pay cut to find work that matches their values. If you don't want to leave all those $1,000 bills on the sidewalk and engage the team you lead, you need to see through the illusion that extrinsic rewards are what employees care about most. You need to stop focusing solely on material goods and focus on nonmaterial ones.

The four pillars of intrinsic motivation

Organizations that engage their people rely on what I call the "Four P's" of intrinsic motivation:

  1. Purpose: Significance, meaning, impact, service, self-transcendence
  2. Principle: Integrity, ethics, morality, goodness, truth, dignity
  3. People: Belonging, connection, community, recognition, respect, praise
  4. Autonomy: Freedom, creativity, achievement, learning, self-mastery
Why Money Isn't Enough to Motivate Your Team Members | Entrepreneur (2024)

FAQs

Why money is not a good motivator for employees? ›

It may light a temporary fire, we may get a temporary boost resulting in higher sales or productivity, but the problem with relying on incentives is that it is never enough. If money is the only employee engagement strategy we are offered, then the only way to keep the team motivated is to continue to offer us more.

What are the negatives of using money to motivate employees? ›

Pros and Cons of Monetary Incentives
Monetary Incentives in the Workplace
ProsCons
• Influences positive behaviors• Can create a sense of entitlement
• Encourages high performance• De-motivates employees who do not reach targets
• Increases productivity• Short-term focus
6 more rows

Is money enough to motivate employees? ›

Money is important, but it's not everything

While workers won't turn down these benefits, other tactics and programs can also motivate and compensate your team. In addition to competitive salaries, today's employees want job stability, respect, meaningful work and a positive work-life balance.

Why is pay not an effective motivator? ›

Behavioral research shows that money, incentives, and rewards only produce temporary compliance. Why? Because these types of motivators do not change the attitudes that can contribute to our underlying behaviors, nor do they change any values or commitments we hold.

Is money a good or bad motivator? ›

Money can be a very effective motivator but a great deal of it is needed to stop adaptation effects; too much for most organizations to bear. Second, what leads to pay satisfaction is not so much absolute salary but rather comparative salary.

Is money a true motivator to improve performance? ›

According to Herzberg, money falls into the category of hygiene factors, which are essential for preventing dissatisfaction but do not necessarily lead to long-term motivation or job satisfaction.

How does pay affect employee motivation? ›

A study conducted by Glassdoor found that 45% of employees were motivated to work harder when they received a higher salary. A high salary can also help to reduce stress and financial worries, which can have a positive impact on an employee's mental health and well-being.

Does money motivate people more than any other thing in the workplace? ›

Money motivates and provides incentives to employees to give their all when at work as once they have the money in their hands there is a level of satisfaction that they have achieved and this satisfaction encourages then to work more harder so as keep getting the money.

Is money the biggest motivator at a workplace? ›

Money is necessary to meet the most basic needs of employees, but it is not their primary motivator. Monetary incentives cannot compensate for all aspects of how much an individual enjoys their job either.

Why is it hard to motivate employees? ›

These reasons fall into four categories — a quartet we call the motivation traps. Namely, they are 1) values mismatch, 2) lack of self-efficacy, 3) disruptive emotions, and 4) attribution errors. Each of these four traps has distinct causes and comes with specific strategies to release an employee from its clutches.

How to financially motivate employees? ›

Businesses can use a range of methods to motivate their employees. Financial motivation. involves motivating employees with money and things associated with money. The main methods of financial motivation used in business are remuneration, bonuses, commission, promotion and fringe benefits.

How can you motivate employees without money? ›

Establish privileges. Rather than providing financial incentives for meeting certain goals or objectives, offer your employees privileges instead. These could be opportunities like an extra day of paid time off , a longer lunch break or casual attire day.

Do higher salaries motivate employees? ›

Recent research suggests that high salaries can help attract, retain, and motivate employees and even increase company profits. The biggest responsibility managers have is to ensure that employees are performing at the highest level.

Can money act as a motivator? ›

Money as a Motivator

Money is often considered the most powerful motivator because it can provide many benefits, such as access to material possessions, improved social status, and a better quality of life. The desire to earn more often drives people to seek higher-paying jobs or work longer hours.

Is money the best form of motivation? ›

Yes money is the biggest motivation for a person. There are two types of people; 1- Unfortunately, it is the case that most people run after money and all their efforts are for money. Such people have no respect for relationships and humanity.

Top Articles
Latest Posts
Article information

Author: Edwin Metz

Last Updated:

Views: 6497

Rating: 4.8 / 5 (58 voted)

Reviews: 81% of readers found this page helpful

Author information

Name: Edwin Metz

Birthday: 1997-04-16

Address: 51593 Leanne Light, Kuphalmouth, DE 50012-5183

Phone: +639107620957

Job: Corporate Banking Technician

Hobby: Reading, scrapbook, role-playing games, Fishing, Fishing, Scuba diving, Beekeeping

Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.