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Is money the biggest motivator for employees?
For many years, companies have used money incentives as the main motivator for their employees to be more efficient and stay with the company longer. It seems like a no-brainer: You expect people to work harder if they earn more money. In addition, people are expected to stay with their company if they are paid well and rewarded with bonuses, but studies now show that the relationship among compensation, motivation and performance is much more complex than we think.
While monetary incentives can motivate employees, they aren’t as powerful as most people believe them to be. In fact, studies show that only the expectation of earning money in the near future is a strong enough motivator to change behavior. But after an employee receives their money, the power to motivate that came with the anticipation of being paid becomes short-lived.
Moreover, the monetary incentive must be at least 10% of base compensation for the period to impact change in behavior. This raises two important questions that need to be addressed. First, how effective is a monetary incentive when trying to motivate employees? And second, what are other things that motivate people at work?
