If money actually made the world go around, it would be a lot easier to motivate and manage employees. Unfortunately, the secret sauce to employee motivation and engagement often remains elusive for even high-paying companies.
Employee benefits and fair compensation are fundamental aspects to employee retention and job satisfaction. Employee benefits serve as a foundation for happy employees. At the core, employers need to be competitive, pay fairly, and offer benefits that employees need to care for themselves and their loved ones.
Yet, money and office perks are rarely the driving force behind employee engagement. Once an employee’s core needs are met, money as a motivator is often seen as more of a fight for control. And as such, its power to motivate becomes very short-lived.
Money Destroys Internal Motivation
Employees who are able to provide for their family are seldom driven by a quest for more money. Instead, success becomes a bigger driver and is often defined by the ability to grow, mentor, create, and have ownership over outcomes.
As a result, money detracts from internal motivation. When money is offered altruistic motivations die. The focus on a promised reward takes away focus from creativity and internal drivers toward success.
Money Destroys Creativity
When money is used as a motivator, creativity is often sacrificed as a result. Instead, employees focus on completing tasks and miss sometimes obvious creative solutions. Sam Glucksberg, a psychologist, found that offering a monetary reward to test participants actually increased the time it took for them to solve a creative problem.
In fact, workers only tend to perform better from a monetary reward when their tasks are simple and linear. For example, boring, monotonous tasks can be rewarded with money, but creativity for problem solving will suffer.
Click here for a demo on a more effective way to motivate employees
Monetary Rewards Must Always Grow, Never Decrease
Another problem with using money as a motivator is the perpetual life of this type of motivation. Once money is offered as a reward, and internal motivation killed, money must continue to be offered. Once a monetary reward is withdrawn, motivation drops, usually to lower levels than before money was offered.
This means that employers must continue to offer money for as long as certain tasks or functions must be accomplished. And, money loses its power. That means that the same amount of money will cease to motivate employees over time.
As a result, the monetary reward must be increased again and again to continue achieving the same results.
The good news: Employers who have previously used money as a motivator can change how they provide motivation. Even a few changes can make a big difference.
Monetary Rewards Can Cause Short-Sightedness
When money, or prizes, are used as a reward, employees can become blind to other important issues and long-term goals. In extreme circumstances, this results in unethical, and dishonest behavior. Or, it can cause short-term successes that lean to long-term failures.
Such was the case with the mortgage with the subprime mortgage crisis of 2008 and 2009. Prior to the crash, only short-term gains, profits, and commissions were seen and strived toward. This occurred with the broker who wanted to provide a loan, the companies that wanted to beat the competition in the mortgage market, and the wall-street securities buyers and sellers who wanted a deal. As a result of the short-term profits, very big long-term losses occurred for entire corporations, some of which never recovered.
Instead, make sure that department and corporate goals keep the long-term growth and health of the company in view.
Money Can Motivate Employees To Shy Away From Long-Difficult Problems and Tasks
When money is used as a motivator, employees will often seek the easiest tasks with the lowest risk of failure to achieve the award. The more difficult customer is ignored, while customers seen as low-hanging fruit are often sought after first.
While this may not seem like a bad thing, it is often the more difficult, and challenging problems that bring about the greatest long-term success for employers. Clients that take longer to move large accounts may take more perseverance and time from a sales rep, but are also likely to stay longer than clients who try new products like flavors of ice cream.
And, it’s often the solutions to bigger problems that bring companies lasting success. But, those solutions usually require creativity, killed at the altar of money as a reward.
Managers that take the time to acknowledge employees working through challenging situations provide the recognition and encouragement for more creative solutions and difficult tasks.
The Solution: The How Is More Important Than TheWhat
Money as a reward is detrimental to employer goals, destroys creativity, and becomes increasingly expensive with little ROI. But, money can be used as a positive factor in motivation.
The key is How it is offered, and When.
When money is offered as a reward for specific actions; “If you do this, you’ll get this reward” it is seen as a control factor. The employee agrees to give up their autonomy and receive money as compensation. After the trade is made, the employee reclaims their autonomy by performing lower than before.
But, when employees are given autonomy first and then money is given as an award, the positive impact can be drastic. Managers should outline clear objectives and give employees as much leeway as possible to accomplish the tasks.
When the goals are reached and employees have worked hard, money and other prizes can be given as a thank you. “Now that we won that big client, let’s go out to lunch to celebrate!” is an entirely different situation than “If you win that big client, I’ll take you out to lunch!”
In the celebration scenario, employees are awarded unexpectedly for a big-win. In the second, employees complying with a request are being “paid” to comply. It seems subtle, but it shifts the focus and studies show the effectiveness.
In the same way, non-monetary rewards are as effective and often more effective than money. Thanking an employee for a job well-done, a problem solved, or extra effort exerted has a much greater effect on intrinsic motivation than “bribing” for a great job done.
Conclusion
Changing your approach to motivation from a reward-centric model, to an unexpected award model can take a little time, but will pay big rewards in your employees intrinsic motivation, which in turn will impact employee engagement.
To learn more about how to provide greater autonomy to your employees,
To learn more about how to create a culture that fosters intrinsic motivation, check out our blog article.
How workspaces can increase employee engagement
About Thanks
Thanks is a leading provider of a recognition-based platform that increases communication, builds teamwork, and makes recognition a part of company culture. Fast, easy and simple Thanks makes it easy to bring data-driven employee recognition to your entire organization. O.C. Tanner purchased the Thanks platform in 2019 to fulfill the recognition needs of smaller businesses.
Thanks customers benefit from the same decades of research in employee motivation and company culture that O.C. Tanner enterprise clients enjoy, but in a product that is geared for fast, easy and simple deployment. Whether you’re starting a recognition program or improving and expanding on what you already have, Thanks has everything you need to engage your people with effective, scalable recognition.