Does more money equal more motivation?

A question I frequently get asked is “should we be incentivising our staff by way of financial bonuses and rewards?”

This is a challenge for companies of all sizes - trying to keep good staff performing at optimal levels and also from being poached by larger companies with bigger wage budgets. I have heard story after story in my travels and especially in my work with mining related businesses, of people being sweetened with big pay packets to lure them away from their current employment. How do we as employers strike the balance of not allowing wages to blow out and at the same time keep our people happy and performing at the highest levels?

Intrinsic verses extrinsic motivation

Intrinsic motivation is best described as that motivation that comes from within a person whereas extrinsic motivation is that which comes from external sources. Intrinsic motivation is all about doing that which we find enjoyable and are passionate about, that which relates to what we value highly and where we gain a personal sense of satisfaction. Extrinsic motivation is about external factors that create stimulus to achieve or perform certain tasks such as when a child is obedient due to potential consequences.

In the workplace, the starting point is the hiring process. Identifying keenness and passion for ones work should be primary, skill levels secondary. Much easier to train someone in the technical aspects of their job than teaching them to love their work. The latter akin to trying to make a slow horse speed up – just plain hard work. Many employers bypass this stage. Due to labour shortages (and not really understanding the ‘whole person’), we tend to hire anyone that is somewhere near the mark technically, rather than considering the person themselves.

One of the key observations to consider when both hiring and working with people is that all of us are motivated by what is most important to us. If we value money highly then money it is. If satisfaction from a job well done, then that is reward enough. If it is time with the family, then that is what drives us. Our workers are no different. Different factors drive different individuals according to what is most important for them. Tap into these internal drivers, adapt the workplace around these and you will have employees more inclined to be intrinsically motivated in their work with both themselves and the company reaping the rewards. Their work then relates to their higher values. Incentivise everyone with financial rewards and you potentially will miss the mark much of the time. As Edward L Deci observed:

“If a person who is intrinsically motivated to perform an activity begins to receive external reinforcement for the activity, what will happen to his intrinsic motivation? Previous studies and the present study indicate that money decreases intrinsic motivation, while verbal reinforcements tend to enhance intrinsic motivation. ”

Edward L Deci - Journal of Personality and Social Psychology 1972, Vol. 22, No. 1, 113-120

And if you do head down the path of financial rewards, look at incentives based on team performance as opposed to rewarding individual effort.

Good luck!