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Money as a motivatoir

Money As A Motivatoir

Money as a Motivator

Money is NOT the top motivator. Survey after survey of currently employed workers show that intangibles; such as recognition, involvement, challenge, pride, communication, meaningful work, and opportunity for growth are more powerful employee motivators. Pay and benefits are generally ranked in the middle of the pack in surveys of motivators.

In studies dating back to the 1940s employees have always ranked other items--such as full appreciation for work done, feeling "in" on things, and having interesting work--as being more important to them than their salaries. In the "1994 National Study of the Changing Workforce" conducted by the Families and Work Institute of New York City, "open communication" was ranked highest by respondents when asked to list items they had considered to be "very important" in choosing their current jobs. Everyone wants to know what's going on--especially as it affects them--so simply sharing information is motivating. Salary was ranked 16th.

Money is a need. To many, it is a way of keeping score. It is a means to that which does motivate, and might even induce behavior. Money, of course is important. We need money to pay our bills and live the standard of life to which we are accustomed. This is not to say that money has no motivational value. It does, and the strength of that motivation will depend on each person's life. For an unemployed worker, or one with unexpected medical bills, or with children in college, they will be more keenly aware of monetary needs.

For most employed workers, most of the time, once able to meet monthly expenses, attention turns to the factors listed below that have much greater significance in daily work lives:

1. Feeling they are making a contribution

2. Having a manager express recognition and appreciation

3. Respect of peers and colleagues - Independence and status

4. Involvement and information about activity in the company - The chance to contribute to company goals

5. Meaningful, interesting work

Salary is consistently listed after factors like those above.

In a recent national survey conducted by Robert Half International, a staffing and recruitment firm based in Menlo Park, California, "limited praise and recognition" was ranked as the primary reason why employees leave their jobs today--ahead of compensation, limited authority and personality conflicts. Dr. Gerald Graham, professor of management at Wichita State University in Wichita, Kansas, also found that money wasn't a top motivator. In a research study of 1,500 workers in a variety of settings, personalized, instant recognition from managers was reported to be the most powerful motivator of the 65 potential incentives he evaluated. Second most powerful motivator was a letter of praise for good performance written by the manager.

Content Theories of Motivation

Maslow’s Hierarchy of Needs, Herzberg’s Motivation-Hygiene Theory, and McClelland’s Needs Theory describe the factors that cause people to put forth effort into their work.

A basic assumption of all need theories is that, when need deficiencies exist; individuals are motivated into action in order to satisfy them. Additionally, any essentially unsatisfied need must be addressed before an individual can successfully address higher level needs. The best known of these theories is Maslow’s Hierarchy of Needs.

A. Abraham Maslow established the theory of a hierarchy of needs, writing that human beings are motivated by unsatisfied needs, and that certain lower needs need to be satisfied before higher needs can be satisfied. Maslow’s theory was an alternative to the depressing determinism of Freud and Skinner, that people are fundamentally selfish, lustful, and aggressive, and that only the inhibitions that society places on people and that people place on themselves keep people from going to the extreme. Maslow felt that people are basically trustworthy, self-protecting and self-governing. Humans tend toward love and growth and when they act differently, it is because their basic human needs have not been met. This is based on the assumption that people are motivated by a series of five universal needs.

It should be noted that the ranking here is based on U.S cultural norms. Other cultures (Japan may serve as an example) may have levels ranked in different order; esteem, or saving face, may rank higher than the need for personal safety or shelter.

These needs, as understood in American culture, are ranked according to the order in which they influence human behavior, in hierarchical (pyramid) fashion:

1. Physiological needs – biological needs such as air, food, water, sleep, sex, etc...

2. Safety needs- desire for security, stability, dependency, protection, freedom from fear and anxiety, and the need for structure, order, and law.

3. Social needs – Love, affection, belongingness, friends, acceptance, and the ability to interact with others.

4. Esteem – the desire for self-respect, self-esteem, and the esteem of others. Also include the desire for reputation, prestige, status, fame, glory, dominance, recognition, attention, importance and appreciation.

5. Self-actualization – the need for self-realization, continuous self-development and the process of becoming all that a person is capable of becoming.

Maslow has shown that money is important only as a tool to help people achieve greater levels within their own hierarchy of needs.

B. Herzberg’s Motivation-Hygiene Theory, (the two factor theory) comes from Maslow’s hierarchy of needs theory. It is called the two-factor theory because Herzberg felt that satisfaction and dissatisfaction are the key ingredients for a worker.

· Hygiene factors (extrinsic, dissatisfaction) are those outside the job itself that influence the worker. These include pay, relationship with bosses, work conditions, company policy, etc. If any of these factors is missing or negative, the worker feels dissatisfied with his job. If, however, all these factors are acceptable, the worker is only in a neutral state.

· Motivation factors (intrinsic, satisfaction) are aspects of the job itself, and include achievement, recognition, interesting work, responsibility, advancement and growth. When these factors are present, workers tend to be more motivated and satisfied.

Traditional thought was that in the United States workers in professional and semi-professional jobs respond well to motivation factors; those in blue-collar jobs and in agriculture tend to not respond as favorably. More recently, observers have noted that as basic needs are met, blue collar and agricultural workers can show increases in productivity through exposure to motivational factors that historically had been reserved for higher-level workers.

C. McClelland Learned Needs Theory states that the needs that motivate people’s behavior are not instinctive, as Maslow indicated, but rather learned. This is a significant distinction as an instinctive need is encoded in a person’s makeup, while a learned or socialized need can, in theory at least, be relearned or modified. McClelland believed these learned needs are:

· Need for achievement – establishing and maintaining a high level of performance. Here, workers want personal responsibility, will take moderate, calculated risks, and want early and concrete feedback on their performance. People who desire personal success, are not good managers because the performance of others is not particularly important to them. These people usually make great entrepreneurials.

· Need for power – workers here are concerned with gaining control over others. These people want to be in leadership roles and are usually rated as good performers. These people tend to be good managers because they rate affiliation low and power high.

· Need for affiliation – these individuals are usually interested in social relationships and a cooperative vs. competitive work environment.

McClelland was primarily interested in the need for achievement. He believed that this would help less economically successful groups.

McGregor’s Human Side of Enterprise

Douglas McGregor’s 1960 book, "The Human Side of Enterprise examined theories on behavior of individuals at work. McGregor formulated two models, which he called Theory X and Theory Y. These theories are used as shorthand to explain the set of assumptions making up a manager’s approach to workers.

Theory X assumes that people dislike work, will avoid it if they can; must be coerced, controlled and directed and threatened with punishment to get results; have little ambition and desire security most of all.

Theory Y assumes that work is as natural as play, self-direction and self-control are equally natural, that motivation results from self-esteem and a sense of achievement; that most people seek responsibility. Theory Y also holds that imagination is present in most people and that organizations use only a tiny part of the intellectual capacity of their workforce.

McGregor believed that Theory Y was the most effective philosophy for managers to follow. This has become such a widely held belief that one would be hard pressed to find a self described Theory X manager. Most people could, however, name other managers who they feel must subscribe to a theory X philosophy. Under theory Y; money is not the primary motivator. The extent to which one may observe Theory X motivated behavior in many organizations, is to suggest that organizations do little to satisfy employee higher order needs (Social and Esteem). Generally, a paycheck allows employees to satisfy their lower order needs (Physiological and Safety).

Frederick Taylor advocates money to motivate

Frederick Taylor was one of the early advocates of using money to motivate workers. Taylor believed the following basic steps would improve the efficiency of their workers:

1. Develop a science for each element of the job to replace old rule-of-thumb methods

2. Scientifically select employees and then train them to do the job as described

3. Supervise employees to make sure they follow the prescribed methods for performing their jobs

4. Continue to plan the work but use workers to actually get the work done

Taylor observed what he called "soldiering"- employee’s deliberately working at a pace slower than their capabilities. He then started the piecework pay system to reward the workers who exceeded the target. The scientific approach assumes workers would try and maximize pay by producing as many units as possible. What Taylor found was inconsistent with these assumptions. He observed that the group itself informally established an acceptable rate of output for each member. To be accepted by the group each worker produced at that rate. This proposed that workers respond primarily to the social context of the work place, including social conditioning, group norms, and interpersonal dynamics. This increased satisfaction should in turn increase productivity.

Elton Mayo saw this and wanted to study social interactions in the workplace. It was obvious that money alone was not a motivator. He did his research at the Western Electric’s Hawthorne Works in Chicago between 1927 and 1932. The studies grew out of preliminary experiments on the effect of light on productivity. Those experiments showed no clear connection between productivity and the amount of illumination but researchers began to wonder what kind of changes would influence output.

Mayo observed workers and realized that, workplaces are social environments and, within them, people are motivated by much more than economic self-interest. He concluded that all aspects of industrial environments carried social value. The workers had a need to cooperate and communicate in informal groups. The group determined the workers’ behaviors and attitudes. The group’s perceptions of production standards were more important than management’s conception.

This phenomenon has been described as the rewards you reap when you pay attention to workers. The mere act of showing workers concern for their well being usually spurs them to better job performance. This has become known as The Hawthorne Effect.

Process Perspectives on Motivation:

The process theories focus on why people choose certain behavioral options to fulfill their needs and how they evaluate their satisfaction after they have attained these goals. Three useful process perspectives on motivation are expectancy, equity and goal-setting theories.

Expectancy theory – suggests that motivation depends on two things –how much we want something and how likely we are to get it. This theory rests on four basic assumptions:

1. Behavior is determined by a combination of forces in the individual and in the environment.

2. People make decisions about their own behavior in organizations.

3. Different people have different types of needs, desires, and goals

4. People make choices from among alternative plans of behavior based on their perceptions of the extent to which a given behavior will lead to desired outcomes.

This suggests that motivation leads to effort and that effort, combined with employee ability and environment factors, results in performance. This will then lead to outcome, which will have some kind of value.

The Porter-Lawler Extension of Expectancy Theory suggests that if performance results in equitable rewards, people will be more satisfied. Thus, performance can lead to satisfaction. Managers must therefore be sure that these rewards are fair and equitable, for all. This does not mean that these rewards have to be monetary; just fair and perceived as rewards by workers.

Equity theory – contends that people are motivated to seek social equity in the rewards they receive for performance. Equity is an individual’s belief that the treatment he or she is receiving is fair relative to the treatment received by others. This theory suggests that people view their outcomes and inputs as a ratio and then compare it to the ratio of someone else. This could mean that workers who feel under compensated reduce their performance.

Goal-setting theory – assumes that behavior is a result of conscious goals and intentions. There are two specific goal characteristics that are expected to shape performance:

1. Goal difficulty – is the extent to which a goal is challenging and requires effort.

2. Goal specificity – is the clarity and precision of the goal.

This theory is about setting goals and the impact this has on performance. People are motivated by goals, more so by specific rather than vague goals. The harder an achievable goal is set, the more likely it will be achieved. Feedback helps, as does having workers examine their own efforts to achieve goals they set in conjunction with their supervisors.

Two requirements for achieving goals are commitment to the goal being set regardless of whether the individual sets the goal (it’s better if this happens) or is assigned the goal and; self-efficacy, the belief the individual has that he or she can achieve the goal.

The Expanded Goal-Setting Theory of Motivation is one of the most important emerging theories of motivation. This theory suggests that goal difficulty, specificity, acceptance, and commitment combine to determine an individual’s goal-directed effort. This effort, when complemented by appropriate organizational support and individual’s ability and traits, results in performance. Finally, performance is seen as leading to intrinsic and extrinsic rewards, which in turn results in employee satisfaction.

The key point is that the money employees are paid for the job they are hired to do is compensation, which should be a function of the company's compensation philosophy and its market and geographic considerations. Increasingly, such economic incentives are becoming rights rather than rewards. In his book "Management: Tasks, Responsibilities, Practices," management guru Peter Drucker of The Claremont Graduate School in Los Angeles points out: "Merit raises always are introduced as rewards for exceptional performance. In no time at all they become a right. To deny a merit raise or to grant only a small one becomes a punishment. The increasing demand for material rewards rapidly is destroying their usefulness as incentives and managerial tools."

In some cases, cash awards even have been found to have a demotivating effect. Cecil Hill, corporate manager of improvement programs at Hughes Aircraft Co. based in Los Angeles, claims in a Spring 1989 article in National Productivity Review: "I have found that certain aspects of the cash awards approach would be counterproductive at Hughes Aircraft. For example, cash awards would reduce teamwork as employees concentrated primarily on individual cash gains. We also have found instances in which 'pay' for certain types of intellectual performance tends to denigrate the performance." In short, cash awards seemed to have a demotivating effect overall for the workers at this level. Recognition boosts employees' esteem and performance. Recognition, however, is what you acknowledge above and beyond what workers are paid to get the best effort from employees. "Compensation is a right, recognition is a gift," Kanter points out. "Recognition has multiple functions beyond simple human courtesy. To the employee, recognition signifies that someone notices and someone cares. What's the point of going all out to do something special if no one notices and it doesn't seem to make a whit of difference?" Paul M. Cook, founder and CEO of Raychem Corp. based in Menlo Park, California, agrees with this belief: "The most important factor is individual recognition--more important than salaries, bonuses or promotions. Most people, whether they are engineers, business managers or machine operators, want to be creative. They want to identify with the success of their profession and their organization. They want to contribute to giving society more comfort, better health, and more excitement. Their greatest reward is receiving acknowledgment that they contributed to making something meaningful happen."

Hence, money is an important part of motivational behavior. It is not, however, the most important.

If one has no money, or insufficient for basic needs (Maslow), then one will do almost anything to get some. Money is a motivator at this basic level. However, as one begins to have enough to satisfy basic needs, it has less and less effect. People will generally choose to do things they like, prefer or which meets their values and aspirations, rather than seek more money. There seems to be other areas of concern that affect motivation:

· Job Security – Most people want a job that is permanent and pensionable, and that assures them of security. They will settle for the lower pay because they know they are safe and that is important to them.

· Job Satisfaction – Having interest in the job and gaining professional achievement is important for some people. They love their jobs! They live for it and get emotionally, intellectually and physically satisfied when they accomplish things in their work. They look forward to their jobs even if the pay is not desirable.

· Staff Welfare – Some organizations put their worker welfare first. Employers provide accommodations, training, transportation, assistance during times of need (such as bereavement), medical aid, children’s education and flextime schedules. Some employers even provide personal counseling to those in need.

· Gain-sharing – Organizations reward workers for their contributions. Workers are promoted and recognized for their achievements.

· Positive environment – Making people feel appreciated from day to day will do more than anything else to keep morale high and workers happy.

Once the above are in place, employers may consider an even greater variety of non-monetary motivators. These can be tailored to fit a company’s culture and the individual needs of workers. Some examples include:

4 Certificates, flowers, letters of recognition for outstanding contributions

4 Unsung champion awards at periodic meetings

4 Photos of major contributors for special achievements

4 Birthday cards/personal phone calls from the manager

4 Assignment to more challenging projects

4 Greater input into their own assignments

4 More autonomy in their work

4 Time off from work for family or personal reasons

4 Doing a job from beginning to end with a visible outcome

4 Greater responsibility, perhaps greater influence in decisions

4 More supervisory or leadership responsibilities

4 Exposure to a greater number of jobs, such as rotation

4 Easier and faster access to management

4 Opportunity to increase technical or management skills

4 Greater coaching from more experienced employees

4 More desirable work space; new or better equipment

4 More flexible work hours; freedom to work at their own pace, when possible

4 Recognition from peers, immediate manager, higher-level management

4 "Thank you" note copied to the appropriate higher-ups

4 Assignment to tasks in which they feel confident

This enhanced level of energy and initiative can be achieved by focusing more on how employees are treated rather than how much more they will be paid. For the best results, pay them fairly, but treat them superbly.

What motivates people to work?

At the most basic level, the obvious answer is a paycheck. The need for a paycheck gets workers to show up each day. People work because they need money to feed, clothe and house themselves and their families. In years past, the way companies got people to work harder was to offer them more money. Today's flat organizations offer less opportunity for raises and promotions and today's workers respond to different motivational tools. It is the intangible factors that motivate workers to perform above minimum levels.

A professor at the University of Massachusetts surveyed people on whether they would work if they had inherited enough money to live comfortably. Eight out of ten said yes.

Billionaires Warren Buffet and Bill Gates throw themselves into their jobs as if their next meal depended on it, but that's obviously not the case. They are motivated by factors such as challenge, recognition and satisfaction. Clearly, a paycheck is not the only motivation that drives people to work.


1 Dick Cipoletti, Motivating Employees in Todays Environment, JobQuest, 2001, **

2 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, *http://www.fedorg/onlinemag/dec96/motiv.html*

3 Dick Cipoletti, Motivating Employees in Todays Environment, JobQuest, 2001, **

4 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, *http://www.fedorg/onlinemag/dec96/motiv.html*

5 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, P. 2. *http://www.fedorg/onlinemag/dec96/motiv.html*

6 Richard Lowry, A.H. Maslow’s Vision of Human Nature, Vassar College, 1999, **

7 John R. Schermerhorn, Jr., James G. Hunt, Richard N. Osborn, Basic Organizational Behavior, John Wiley & Sons, Inc., 1998, P. 65.

8 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 274-275.

9 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 275.

10 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, *http://www.fedorg/onlinemag/dec96/motiv.html* P. 3.

11 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 276.

12 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 277.

13 Douglas McGregor, Theory X and Theory Y, **

14 Douglas McGregor, ManagementLearning. Com Ltd., 2000, **

15 Douglas McGregor, Theory X and Theory Y,*

16 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 11.

17 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 12

18 Yonatan Reshef, Elton Mayo & The Human Relations Movement 1880-1949, University of Alberta, * P. 3.

19 Elton Mayo’s Hawthorne Experiments- The Findings,, **

20 Elton Mayo’s Hawthorne Experiments- A Sense of Belonging,, **

21 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 277.

22 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 277.

23 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 278.

24 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 280.

25 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 281.

26 Ricky W. Griffin, Fundamentals of Management, Houghton Mifflin Company, 2000. P. 281, Figure 10.6

27 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, *http://www.fedorg/onlinemag/dec96/motiv.html* P. 2.

28 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, *http://www.fedorg/onlinemag/dec96/motiv.html* P. 3.

29 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, *http://www.fedorg/onlinemag/dec96/motiv.html* P. 4.

30 Godiramang Makhaya, Are You a Motivator?, 2001, **

31 Bill Repp, Motivate Without Money, 2001, Arizona Daily Star, e-mail: [email protected] P. 1.

32 Bob Nelson, Dump The Cash, Load On the Praise, July, 1996, *http://www.fedorg/onlinemag/dec96/motiv.html* P. 5.

33 Dick Cipoletti, Motivating Employees in Todays Environment, JobQuest, 2001, **

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