Money as a motivator: does it actually work?
Efficacy of money as motivator at work? When attempting to achieve a goal, an individual’s behavioural outcome is commonly referred as ‘motivation’. Is it possible to condense this outcome in just one factor? Katzenbach and Khan suggested that money is a by-product of work, and works better at attracting and retaining people than at influencing their behaviour, becoming perhaps a secondary factor when related to the intrinsic definition of motivation. A practical demonstration of the previous statement is shown in the “compensation war” between Private Equity Funds and Investment Banks, which are competing for the brightest graduates with big pay rises, guaranteed bonuses and promises of rapid promotion. Many theories have been published, most of them in the 1960s and 1970s with few new additions, however, they have not provided a full solution on the issue.
I will try to expose different point of views about the matter through two different kind of theories: content theories, which emphasise particular aspects of an individual’s needs and goals as the basis for motivated behaviour, and process theories, which focus on the interactions between the variables involved in the motivation process.
XY
The research conducted by the social psychologist Douglas McGregor formed his “X-Y theory”, which found two main school of management. Just like the difference between monopoly and perfect competition in economics, McGregor’s found that the X-theory is closer to the monopolistic kind of management, in fact, it assumes that the average man is by nature indolent, resistant to change, dislikes responsibility, and therefore must be “forced” to work, along with rewards and money. On the other side of the spectrum – close to the perfect competition side – the Y-theory assumes that people are not by nature passive to organisational needs, and that motivation, potential for development, the capacity for assuming responsibility, the readiness to direct behaviour toward organisational goals are all present in people. The Y-theory was applied into an American business before, however the findings showed that the experiment did not work effectively. It was concluded that all individuals, however independent and mature, need some form of structure around them and some sort of leadership influence. This observation is still actual and can be taken into account even in today’s workplace.
Maslow
Maslow’s theory says the hierarchy is based upon five stages: the first two are called primary needs, concerned with the basics physiological needs, the latter three stages are called secondary needs, which are psychological needs which can be achieved after the satisfaction of the primary needs. The overall result is “self-actualization” which is, according to a common definition is “the desire for personal fulfilment, to develop one’s potential, to become everything that one is capable of becoming.” To improve the XY theory, Maslow implemented a “dynamic” pyramidal system, making everyone capable of becoming a potential Y-model.
Two Factors
Frederick Herzberg did not examined the causes of motivation directly, but rather, scrutinised the causes of job satisfaction and dissatisfaction. Herzberg used the critical incidents technique, which involves asking if something has been particularly satisfactory or dissatisfactory at work. His poll, composed by a group of two hundreds accountants and engineers, indicated that the general trend included two main sets of factors: the first – called motivators – included sources of satisfaction like advancement, recognition, autonomy; the second is concerned with hygiene factors like working conditions, salary and job security as sources of dissatisfaction. The assumption made was that satisfaction and dissatisfaction in the workplace are both caused by different set of factors (above-mentioned). It was emphasised that a manager should motivate workers through motivator factors and not hygiene factors. Furthermore, the primary strategy is job enrichment, which means implementing a higher degree of accountability for individuals by giving them more control over varied elements, autonomy and the opportunity to develop expertise. Job enlargement is contemplated as well: greater variety of task to perform in order to make the job more interesting.
Given the strong shift of the labour market toward the tertiary sector, the standard "20th century kind of job" is being translated into higher varieties and complexity levels nowadays. As shown by the researches of the RSA (2010), once the work complexity surpassed the rudimentary cognitive skill level, higher compensations led to poorer performances.
Similarly, another reason for believing that compensation is not a main factor of motivation is found in the low correlation between money and happiness. A research by Diener indicates that “the beliefs about the causes of happiness are varied, but one thing is clear: money is rarely mentioned.” The survey included a wealthy group and a non-wealthy group: when surveyed about the actual usefulness of money, both of them confirmed that “the effect of money on subjective well-being is, across people, not very strong.” Conversely, a close relation was found between motivation and equity in the work place. Neurologist David Rock observed that most people are not directly motivated by money, in contrast, they might be deeply demotivated in case of unfair compensation, or when others are being overpaid by comparison. The comparison that an individual makes with others set his perception of fair treatment.
To sum up
Is it possible to motivate employees by giving them more money? The short answer is no. As Katzenbach and Khan suggested: “Money encourages self-serving short-term behaviors better than it motivates lasting institutional achievement.” It is a means to attract and retain the workforce, however it does not influence the behaviour at work. As shown by a variety of theories, motivation is a vast topic with many different approaches, consequently it cannot be connected to a single absolute factor. One mutual point amongst all the models presented is the subjectivity of their methods. For instance, some theories made the assumption that money is the only way to motivate employees, ignoring that there are other motivators such as autonomy or social rewards. Others tried to standardize the path to an individual’s self-actualization, unsuccessfully anyway because of the genericness and subjectivity of his levels. Therefore, motivation is a personal aspect, and it varies for each individual. It is not possible to classify money as the main motivator. If that would be the case, every single individual would simply try to work as much as he can to make more money. Different strategies may be applied to the workplace to increase motivation, and of course, compensation is part of these approaches, nonetheless there are plenty of other ways to motivate the individual at work.
Ruben Ferretti