I touched money and motivation subject recently. Since the post generated quite a discussion it seems the subject is important for many. It also seems many people disagree with the opinion that money doesn’t really motivate which is nice since it gives me excuse to beat the dead horse again.
In short my points were:
- Money is more a hygiene factor than a motivator.
- When you pay less than some healthy level expected by people they start looking for a job.
- As long as you match people’s comfort level they get, or don’t get, motivated by non-monetary factors.
I received a number of counterarguments in comments, which I’ll try to address here. I’m aware I overstate bit here and there but that (hopefully) doesn’t change validity of arguments.
Money does motivate people (and go sell your crap somewhere else)
A nice thing about Dan Pink’s TED Talk is that he’s making a case. He brings arguments – studies made all over the world – to prove the point: money doesn’t seem to make people work better. Now, I haven’t looked very hard to find research studies which prove the opposite, but maybe you can redirect me to them. For now I consider it is 1:0 for Dan’s team.
I saw teams whose productivity increased significantly just after bonus money was promised. The problem is usually they were just tricking the system. They knew they could do the job in given time but it was better to slack at the beginning waiting for the magic wand of extra money to be used. Then everybody got at full speed to save the project. The only thing which surprises me is where the hell the management was and why nobody did anything about that sick situation?
I know lots of examples of people working their asses off because project required their extra effort. Usually they got a big bag of money at the end and everyone was happy. Does it mean money motivated them? Well, I think we’re messing the cause with the effect here. They didn’t start discussing with their managers how much they were going to get. They just gave more, because they thought it was a right thing to do (I know I totally oversimplify here, but we won’t discuss everyone’s individual drivers here, will we?) Then the effect usually was they got some extra money, which was of course completely fair.
And for the end, if money motivates people my question is: why they don’t get more and more motivated as they get more and more money? I gave quite a lot raises and huge piles of extra money in my career and my observation is it makes people happy. Happy, not motivated. They’re engaged as they were. They give a lot, as they did. But somehow they don’t seem to be motivated better.
Of course sometimes they consider the money they got as an insult and their motivation fall flat in its face but we’re talking about motivating, not de-motivating, here.
Companies (and villains running them) want to have engaged people but only to exploit them (that’s what villains do after all)
That’s true for some companies and some villains running them. But if that is your only experience with your employers please accept my humble condolences. There are toxic companies out there. There are normal companies with toxic managers as well which, from employee’s perspective, is no different. The world however isn’t inhabited with villains only. There are superheroes as well. If you’re sick of work among bad guys maybe it’s time to join Rebel Alliance, La Resistance or other good guys of your choice.
I know it’s easy to generalize basing on your own situation and experience (that’s what I do on the blog virtually all the time), but be sure to check what’s happening out there in other organizations, especially when your experience is limited to one or a couple of teams/companies.
Because of rapid development of IT industry we face deficit of good, experienced leaders and managers. It’s even truer in countries where the industry is even younger, like in Poland where I live. But still, that’s not a reason to dismiss the existence of healthy companies or decent managers.
People should earn amount they expect or they get frustrated (which is bad since frustration is such a nasty word)
Well, yes. Sort of. We come back to the discussion over a healthy level of salary. If I get paid above some expected minimum, which is a very individual thing, I could always use a raise but I don’t get frustrated about money. However if you asked me how much I wanted to earn my answer would be likely something more than I get. That’s how humans work – we always want more than we have.
And now that you asked me, yes, I do have a pitch to ground why I should earn more. But don’t be stressed, I’m not going anywhere only because my pitch doesn’t convince you. See? I’m not frustrated.
However I do agree that once we don’t get the amount we expect there’s always a risk that the other company would offer us more and then we’d be really incentivized to make a move. But I guess that’s the risk most of companies tend to accept. After all last time I checked running a business was about earning money and not spending everything just to pay people more.
Best moment of motivation is when you see the money on your bank account (let’s switch to weekly wages, shall we?)
OK, I admit, I don’t get this. At all. You mean once you see a bunch of money on your account you’ll be coding like crazy till the night? Would it be a better motivation to earn weekly wages than monthly salaries only because they’re um… more frequent?
It’s difficult for me to address this argument but I guess we define motivation differently. As industrial bloodsucker I consider motivation as something good not because the word sounds nice but because motivated people tend to produce better results when they work. Call it a better productivity, bigger involvement or whatever.
I understand people are happy when they see salary on their account but if we can build no connection with their work quality whatsoever let’s not call it motivation, OK? Of course feel free to correct me if I’m missing something here.
Over time people get more experienced so they should get raises (like levels in RPG games)
Um… no. Next please!
Well, actually that’s the tricky one. Once we get more experienced and more knowledgeable it’s a natural thing we tend to want more, thus expected raises. The problem is employment isn’t an RPG game and our contracts aren’t a leveling system.
Contract and salary represent a result of a kind of compromise. It’s about how much specific employee is worth for specific employer. It means that the same employee would be judged, and paid, differently depending on the hiring company. And yes, it does mean your salary depends on company’s clients, hiring strategy, specific managers you’ve been talking with, shape of the industry, organization’s career paths and a hundred of other factors which are completely independent on you.
Sometimes getting more experience and/or knowledge doesn’t make you more valuable for the company. So maybe it’s time to learn what makes one a more valuable person for the specific organization instead of waiting for a reward for seniority?
There are many jobs which can’t be loved which means people do them for money (after all love and money are the only motivators in the world)
True. There are many jobs which can’t be loved, especially in the corporate world. But that doesn’t mean people do them for money and for money only. If they hated virtually everything about their jobs they would be looking for new ones like crazy. Somehow vast majority of them do not. I assume it’s not that bad then.
We don’t get frustrated with our jobs in a second or after a single issue. Frustration grows over months, possibly years. Then yes, it is about a single problem or a single situation but it’s just the last straw.
Our happiness with our jobs is a complex thing. I could count multiple things I’m happy with and multiple of those I’m definitely not happy with. However the overall mark is pretty good so I’m not going anywhere and probably one new ugly thing isn’t changing this attitude.
I think it works pretty much the same with jobs which are considered as, well, not-so-nice. Corporate world is the one where conditions are usually less humane but then majority of corporations don’t deal with the risk of being extinct in a few months – something which is pretty common among startups. It’s of course only one of examples but the theme is similar in many cases. After all, when the company offers only jobs which are totally hated they’re going out of business soon as CEO won’t deliver all the projects single-handedly.
Now, I’ve shared my arguments a little less briefly but I’m sure I haven’t convinced everyone (that wasn’t the goal by the way). Let’s get the heated discussion started.
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18 comments… add one
An interesting topic.
I agree with Pawel, provided the important condition is met., that you should have “enough” money…
This is the fundamental problem (and not only in Poland) that its hard to cover the basics of life, somewhere reasonable to live on a regular salary, and save for the future at the same time. The question is “what is enough” and a lot of people are just conditioned into wanting more and more and more without thinking about whether it makes them any happier
it’s worth looking at this type of theory of motivation too.
http://en.wikipedia.org/wiki/Theory_X_and_theory_Y
As someone who regularly starts businesses. I wonder about my own motivations. Money is on the list but it’s definitely not the key motivator even though making a profit is essential.
Richard
I wish I could offer an alternative observation or point of view. I know of no management studies contrary to your position Pawel.
It would seem while too little compensation can dissatisfy an employee, excessive compensation does nothing to motivate the employee.
Pawel
I think the argument about leveling up is valid but it isn’t about money. It’s about kudos and prestige. You’re with me here, right?
Richard,
Yes, it’s all about “enough.” Fortunately in IT industry we’re paid well, some would even say that outrageously well, so the problem of earning enough to live a decent life isn’t so common.
But then you’re right – it’s usually about having more and more. Statistically we’re never happy with what we have.
By the way: you bring interesting perspective. As a business owner you expect profit, but you are aware you have to invest some money into your people to build the the profit. You see both sides of the equation. Unfortunately when we’re discussing employees it doesn’t work that way.
Craig,
I think it is individual thing. I know people who don’t give a damn about prestige of their jobs. But to some point you’re right – people should be acknowledged for what they do and this is often something we managers screw up.
On the other hand I often face this argument more like “I’m here long enough so I should get this or that” instead of “I achieved this or that so I’m more valuable for the company now so I should get something.” Of course that people know a lot about work they do. After all if I was working on a single project for a couple of years I’m expected to know a lot about it or something is seriously wrong with my learning skills. The question is whether this makes me way more valuable than I was. This is probably a subject for another post but pretty often the answer is “no so much.”
IMHO considering motivation in relation to money only does not make sense. It’s moving from multi-dimensional world of people’s values to only one dimension. Great for research and studies, but with almost no pratical meaning for managers or employers.
What really count is value people are getting for themseleves by working for given organization. And it’s specific set for each of us, moreover it changes over time. If you want to get people motivated understand what they value, what’s important for them. Sometimes they may work even for free, sometimes no money will make them move a finger.
One thing I know for sure: if you promise given amount, let’s say 100 USD, and pay 99,99 USD you have demotivated employee. Granted.
It’s value that motivates. And value does not always equals money.
Mariusz,
The funny thing is, I know lots of managers who are bringing motivation to this single factor. And they tend to thing it doesn’t work not because they try to oversimplify the whole thing but their bag with bucks is just too small.
It’s like doing more of the thing which doesn’t work and expecting that it would work this way.
As you say – it’s value which motivates. And value is a damn individual thing.
Huh! Seems like a topic for an endless discussions :)
I totally agree with not treating money-motivation problem as one dimensional problem only – like Mariusz wrote.
Different people get motivated by different factors that even change with time. I think that’s why we need leaders more than managers and why there are so many books about that and so few good, visible examples. Sometimes it seems we love techniques, procedures and numbers more than humans.
Everybody wants to be accepted, loved, cared and have a positive impact on other people’s lifes… I think at work we too often forget about that.
An interesting data point for motivation for me was the book ‘Flow’ by Mihaly Csikszentmihalyi, which claims (based on researches) that people look very badly for that ‘flow’ experience – when they have to focus and engage so much that they lose sense of time and what’s happening around. I buy that. I love that feeling.
The book provides several ‘requirements’ for the ‘flow’ experience to occur, let’s name just few: feeling of control, clear goal, ability to measure progress (or get clear feedback) and a challenge that more or less matches our abilities.
My collegues simetimes complain about their salary (mostly by comparing what they heard from these working at some other company!), but they think about leaving mostly when they get frustrated about these factors like not clear goals, feeling they can’t control what they do or there are no more challenges.
At the end… there is one sentence from Bill Hybels that just stick in my mind: “The only way to motivate people is to live a motivated life in front of them”.
Hello Pawel,
Money does not motivate. That is a simple and proven fact. Money is not a driver to increased productivity, enhanced output, or greater sales performance. On the other hand, lack of money can be a powerful motivator. Why? Visit Maslow’s hierarchy of needs for the best explanation on that one.
From researchers such as Dan Ariely, Richard Thaler, Ran Kivetz, or Frederick Herzberg, we have learned quantitatively that people are not driven to do more of the things you need them to do more of, or less of the things you want them to do less of, nor are they motivated to take on a new behavior simply by the promise of “more money”.
Why? That is a complex answer, for which the most simple explanation is that money does not engage human emotions, and all behavior is driven by our emotions, not by logic or rational thoughts. All behavior. Not some. All.
We behave rationally when it suits our values, our beliefs, and satisfies our sense of self. We act irrationally when we follow our “heart” instead of our logical selves. It is why we get married, why we have children, why we show up for work, why we wear the clothes we wear, why we live where we do, why we have the friends we do, why we drive the car that we drive…you get the picture.
Please come visit me at http://ideationz.wordpress.com. I have been in the behavior change business for 30 years, working with consumer package goods companies, large employers and companies with extensive dealer/reseller networks.
Thanks for opening up the discussion, as it is one that has a long history of stirring up controversy. All the best to you!
Rick S. Pulito
Piotr.
People sometimes do change a job for money and money only, i.e. those caught by head hunters with gold-plated offers. But people do not start looking for a new job for money and money only.
This is a typical case: someone starts looking for a new job because she hates the technology she’s forced to use or the atmosphere is sick or boss is a sick bastard treating everyone around as an Excel row. Then she gets much better offer and she changes the job no matter what. If it is the money which is matched than good, we have yet another proof it isn’t remuneration which is the most important factor.
However I’ve seen a number of cases where the real reasons of leaving was solved when someone left a notice – suddenly it was possible for him to move to another project or to change technology or work under different manager. But then money played its role – the new offer was usually also the one which was better and having old problems solved wasn’t enough to keep the guy in place.
After all, we always want more, don’t we?
Rick,
You don’t have to convince me that money doesn’t work as motivator. However the good answer for a question why so many people still think otherwise would be greatly appreciated.
It is one of those situations where things which are proven don’t really change the way people perceive them. Well, you kinda answered that – we believe that money works as motivator so we behave irrationally. But then the question is: why we believe so? We haven’t seen much of a proof, have we?
Paweł,
Is it possible to motivate someone using any external “tool” (like money)? I think motivation is something very fragile part of ourselves situated deep inside. Because of that I am the only person who can motivates me.
The only thing manager can do is to inspire people and encourage them to grow | make progress|increase efficiency/quality of their work | make them proud of what they are doing.
There is pretty interesting presentation about the motivation (in general) http://www.mragowo.pti.org.pl/pti/mragowo.nsf/0/307cee159b86696780256f83006715ee/$FILE/Mragowo%202004,%20H.%20Glaser.pdf (unfortunately in Polish…) I agree with Glase in many issues.
Looking forward to the next inspiring post :)
Monika,
It looks like a very good presentation, the one that you linked. Yes, motivation is about creating an environment where people can motivate themselves.
But then, I ask this question almost every time on interviews: “what does motivate you?” and I keep hearing over and over again that money is the thing. People actually believe money is the motivator. This is common misunderstanding usually shared by both employees and managers. It ends up with people leaving for jobs which are paid better. And yes, then managers come with the argument that it is about money. They just don’t look for real reasons.
I have a very simple comment to make:
If you offered me 1 million pounds to complete a virtually impossible task such as eating a brick, or completing a standing triple back-flip I would try it. The only reason that I would try it would be because I was motivated by the sumptuous reward of 1 million pounds, there is simply no other factor involved! Therefore money MUST be a motivator!
Problem solved.
@Bryan – How would that affect your abilities, skill or the outcome of performed task? Would you complete it? Would you complete it better?
When we are talking about motivation at work we are not talking about “willing to undertake a challenge” but about effective and efficient finishing work. Given such perspective, does one million dollars really change the outcomes of your work?
I know that this is a pretty old post; but the topic is ever-green, so I will make my comment. I came about this post because of the fact that I KNOW that money does not drive me; and I figured someone might have some advice for how to drive yourself to do things that you know will make you money. There are some people who are driven by money and those are the people who already own a profit-pulling business or will soon own one. Because whatever drives you does not require effort to get out and make it happen. If you are driven by money, then you WILL get out and make it happen. But most people are not driven by money (myself included). I am driven by creating (making things, building things, creating…); but there is more required to making money than having a skill. Something needs to drive you to do the things that don’t come natural to you but are a part of establishing a profitable business. If being money-driven was not a unique attribute, then we’d all be wealthy!
from the beginning I tried to agree with te author, but then I remembered a real case from my own life.
Once I worked for the company with very nice corporate culture, good job organization, clear and simple processes etc. I felt quite good for a long time there. And my only reason…ok, ok, I have found more then… but the real one (I still believe it after many years) was the salary that was “not enough”. If you ask me: would I stay there if more money would be offered – definetely yes, even today.
@Alex – One of the points I’m making here is “people should earn amount they expect or they get frustrated.” And I guess you are sharing exactly such a story.
Money is a hygiene factor. If it is below what is considered the fair level by an employee it affects how you feel about the job. The difference is between being or not being paid fairly though. That’s all. There’s no linear improvement in motivation, productivity, etc while the salary goes up.
Just imagine, back then, that not only did you get the raise you expected, but twice as much. The raise you expected would remove your frustration, thus keep you at the company. What would be the effect of doubling it?
I guess you’d be happier for some time. One thing is it wears off pretty quickly. Another thing is that it doesn’t affect motivation.