Does money motivate performance and employee behavior?

The work behaviour of employees is crucial for organisational success as their behaviourDoes money motivate performance and employee behavior? can directly influence the organisation’s profitability and productivity. Work behaviour can be influenced by understanding what motivates and how to motivate the behaviour of employees. Motivation can be defined as “the inner desire to satisfy a need” as this definition implies, motivation comes from within the employee and managers can only create an environment that motivates employees to achieve organisational goals. An unsatisfied need results in behaviour to try satisfy this need and this behaviour has consequences which could lead to goal attainment. If managers know what motivates their employees they can influence their work behaviour. The question that human resource managers must ask is ‘does money motivate performance and employee behaviour?’

We’re on the fence about whether or not to believe money is a motivator but we will let you decide by presenting some arguments against various theories of motivation as well as Vrba’s statements of money as a motivator for each theory. Theories of motivation can be divided into content theories – what needs motivate behaviour and the factors that direct, produce and sustain behaviours and process theories – how employees are motivated and how to energise, direct, maintain and stop employee behaviours.

Maslow’s hierarchy of needs which arranges needs in hierarchical order and proceed in succession as follows; physiological needs – including basic survival needs,(food, water, air), and basic working conditions. Safety and security needs – the protection from physical and emotional harm, clothing for protection from the elements, life policies, insurance plans, pension plans and organisational structure. Social needs – affection, belongingness, friendship and acceptance. Esteem needs – high self-confidence, positive self-image, compliments, recognition and challenging projects. Self-actualisation needs – self-fulfilment once all other needs have been met, skills development and being the best version of one’s self.  According to Vrba, money motivates the lower order needs of this content theory (physical needs, security needs and social needs.) We’d like to present an alternative argument – money can be seen as a means to achieve the needs in Maslow’s theory. One may be motivated by their esteem needs and may want to be recognised by their achievements through the purchase of a Ferrari, money will be the means to purchase the Ferrari but the motivating factor was the person’s esteem need of recognition.

The second content theory is Hertzberg’s two factor theory. This theory focuses on 1) circumstances surrounding the task (hygiene factors) which lead to job satisfaction and consist of lower levels of Maslow’s hierarchy and 2) the actual task content (motivational factors) which lead to high job performance and consist of higher levels of Maslow’s hierarchy. According to Vrba, money acts as a motivator when the organisation uses it as a reward for good performance. Our alternative argument is that money motivates job performance and is not a motivator for job satisfaction. According to a study done on the relationship between pay and job satisfaction by Timothy Judge, Ronald Piccolo, Nathan Podsakoff, John Shaw and Bruce Rich, they found that when they compared employees at different pay levels across America, Australia, Britain, India and Taiwan they found that “job and pay satisfaction did not vary across employees at different pay levels” and that there is only variance among the employees about how they value money – is it a means to achieve physical needs or to buy that new Ferrari? They found that money does make employees happy and therefore the writer concludes it does not lead to job satisfaction and is not a motivator for job performance.

According to Dan Pink, money is a motivator and if you don’t pay employees enough they won’t be motivated to perform and they will not experience job satisfaction because all they are focusing on is making money but once people are being paid enough, money is no longer a motivator. An alternative argument is that when employees are not being paid enough they are focusing on making the money to achieve their lower order needs rather than the money itself – as explained by Pink.

One of the process approaches we want to focus on is the expectancy theory that states employees will behave in a way because they expect this behaviour to result in goal attainment with a certain amount of effort being expended to achieve this goal. Work behaviour is motivated through managers properly communicating effort to performance expectancies and what personal goals employees can attain through meeting these expectancies. According to Vrba, money is a motivator in this theory because employees expect that good performance will result in a monetary reward that employee’s value.

An alternative viewpoint uses arguments from ‘Motivation: Good Theory – Poor Application’ that states that “managers should spend considerable effort identifying the rewards at their disposal and determining how they can best use these” we interpret this as managers should take time to find out what needs motivate their employees and translate the standard reward (money) to a different motivator (such as a paid holiday) that the employee values highly. An employee will not expend effort if they are not motivated by money and they know this is the only reward available. This statement leads us to draw another quote from this piece; “the availability of rewards is a necessary condition of motivation, but the most important aspect of availability is not what management says is available but what each and every employee perceives is available” if an employee perceives that the effort they put in will result in them attaining any intrinsic/extrinsic reward, they will shift their work behaviour to result in high performance.

Where do you stand in the ‘is money a motivator argument’? We’d love to know your feedback!

Sources:

  • BJ Erasmus, J. S. S. R.-K., 2013. Introduction to Business Management. 9th ed. Cape Town: Oxford.
  • Bagraim, J., 2011. Motivating the South African Workforce. In: A. Werner, ed. Organisational Behaviour A Contemporary South African Perspective. Pretoria: Van Schaik, pp. 81-114.
  • Vrba, M., 2016. Principles of leading. In: M. V. T Brevis, ed. Contemporary Management Principles. Cape Town: Juta, pp. 445-457.
  • Joel K. Leidecker, J. J. H., 1974. Motivation: Good Theory – Poor Application. Training and Development Journal, 28(6), pp. 3-7.
  • David C.Wyld, R. M., 2011. Does MoneyBuy More Happiness on the Job. Academy of Management Perspectives, 25(1), pp. 101-103.
  • Pink, D., 2010. The surprising truth about what motivates us. [Online] Available at: https://www.youtube.com/watch?v=u6XAPnuFjJc
    [Accessed 27 08 2016].
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