All They Care About Is Money!

So is money a requirement for motivating employees? For years we have been asking students in our Performance Management classes to tell us why people leave their jobs, and for years they have told us that most people leave for more money.

Actually, research has consistently shown that while salary increase is important, it is usually far down the list of reasons why employees decide to leave for another job. Significantly more people leave because they want more or new challenges, they are not happy with how they are treated by their current supervisor or they believe their contributions are not valued. Money is obviously important because it allows us to meet our basic needs and achieve some of our life goals, but it may not be as important as other factors that are in the direct control of supervisors.

Using Extrinsic Motivators Effectively

The best supervisors understand that money is just one of the extrinsic motivators that they have at their disposal and that the way they use these motivators is more important than the motivators themselves. Because of this, they follow what we call “The Contingency Rule” in the application of all extrinsic motivators. So what is this rule?

The Contingency Rule: Tie the extrinsic motivator to performance. Extrinsic motivators that supervisors have at their disposal include such things as money, praise, job assignments, training opportunities, etc. Making the receipt of any of these contingent on successful performance is critical to their motivational impact. For example, it has been well documented that cost of living increases act as a satisfier and not as a motivator because they are not tied to performance. It could be argued that not receiving an expected cost of living increase could act as a motivator to look for another job, but in this case it would be a de-motivator for improved performance in the current job.

"Best Bosses" are clear about what they expect from employees, and they are also clear about the relationship between accomplishment of those expectations and extrinsic motivators. When people know that successful performance leads to increase in pay, praise, desired job assignments, etc, they are much more likely to put out the effort required to receive those things. Failure to understand these contingencies will only lead to employee confusion, dissatisfaction and lowered motivation. It might also lead the person to look for another job.

Incentives as a Motivational Tool

Many organizations use both monetary and non-monetary incentives to increase performance.  What do good incentive programs look like and are they really useful?  First of all, when we talk about incentives, we are talking about the application of something desired by the employee that increases the likelihood that they will perform at a higher level.  The objective is to motivate the employee to perform a task/skill for which they are already competent at a faster, more frequent or more reliable level than they have been doing.  Incentives, as defined here are not used to teach, but rather to motivate behavior.  Good incentive programs have three primary characteristics that lead to success. 1.  The behavior required for success is clearly understood.  People can only be expected to achieve a result in a particular manner if they understand the standard against which they are being measured.  I remember once I told my then 10-year old son to “clean up his mess” after a group of his friends had been at our house for a party.  When I came back to evaluate his work, I couldn’t see anything different than before.  When I questioned him about his “failure”, he said he did “clean up his mess”; all that other mess was made by his friends.  I obviously had not defined the standard against which I was measuring his performance.

2.  The measure of success is quantifiable and achievable.   The result must be quantitative so that it can be precisely measured.  Qualitative measures (e.g. high quality) are too ambiguous and leave room for differences of opinion.  Leaving no soda cans or chip bags in the family room after you have cleaned up your mess would have allowed me to have a defendable measure of my sons success in the cleaning task.

3.  The incentive is something that is desired by the employees and is clearly tied to success. The incentive that is applied should be something that is seen as worth the effort by employees (or children, as the case may be).  If it is not, then it will not serve as a motivator and cannot be expected to improve results.  Money is not always required as an incentive.  In the example with my son, I told him that as soon as he met our agreed upon standard he could go outside and play basketball with his friends.  That non-monetary incentive increased the quantity of items that he picked up and the speed at which he did it.  Make sure that you have accurately determined the desirousness of your incentives.