Many managers believe that money is the strongest motivator for their employees. They seem to be ignoring countless studies that show employees are not driven primarily by the desire to make more money. A 2012 study from McKinsey shows that there are far more effective ways to motivate your workers than paying them a higher salary.
That doesn’t mean that money doesn’t have a place at all. It just means that you shouldn’t make it your primary focus. Effective managers understand the role that money plays in driving employee motivation.
Why Doesn’t Money Motivate Many People?
Most studies have shown that money doesn’t increase employee satisfaction. They show that people are more inspired by the opportunity to express their creative side. They enjoy tackling new challenges and changing the world.
These studies have shown that people working in careers involving innovation tend to be happy with their work. They tend to be happier than people working in administrative roles.
Employees also enjoy working with people that they like and respect. They will be miserable going to work every day if they hate the environment and people that they work with. There is no amount of money in the world that will change that for them. You need to make sure that they respect their leaders and the rest of the team.
Is there a Point Where Money IS a Motivating Factor?
Money may be not be the strongest motivator for most people, but that doesn’t mean that it doesn’t play a role. There is a point where you should focus on it. Here are some situations where you should consider raising your employees:
- They are having a difficult time making ends meet. It is difficult to stay motivated at work if you are going home hungry all the time.
- They are getting paid substantially less than the competition and there is no sign that they will ever get paid the same. Paying premium salaries may not be the most effective way to keep people satisfied, but underpaying them can create job dissatisfaction. Employees may be willing to work for lower rates for an employer that they love if the company doesn’t have the budget. However, they don’t want to work for a company that is cheap.
- You have given them mixed messages about the way that your company rewards performance and loyalty. You don’t want them to believe that they are getting paid less because they are not appreciated. You will need to be upfront with them about the fact that the business has a limited budget, but that you still appreciate their accomplishments.
- You are paying below market rates while making substantial profits for yourself. This is arguably the biggest mistake that businesses make. They end up making their employees feel like they are being taken advantage of.
There are better ways to motivate your employees, but that doesn’t mean that you can neglect it completely. Make sure that your employees understand that they aren’t getting gipped.
About the author: Kalen Smith is a career and entrepreneurial writer.