Leadership, Product Management, Teams

Kerching! Money as a Motivator


Now I’m sure that by now you are all sat on the edge of your seats waiting to see how motivation levels are going at Magic Milestones, so here goes the last instalment of my motivational blog trilogy. 

I’ve been working with the Senior Management Team to help bolster everyone’s self-confidence throughout the company and get the whole team really believing in their ability. Everyone seems to be really motivated and giving things their all. The Sales Team particularly are already starting to see the fruits of their labour and the buzz they are generating in the office is great to see. As we have seen such great motivation levels within the Sales Team, we have now thrown out our motivational experiment to all teams across the company. So it is with great optimism that I turn to look at the third topic on motivation – money and rewards.

Rewarding staff for their hard work and success is something every employer knows is important. Making staff feel valued and appreciated goes a long way to helping create a motivated team as well as having an impact on staff retention.

So once again putting my MBA head on, what do the theorists have to say on this matter? J. Stacy Adams, a workplace and behavioural psychologist, developed his Equity Theory in 1965. It focuses on the need for a fair balance between what employees put in and what they get out and suggests that when the feeling of fairness is not achieved, employees become dissatisfied and create lower levels of motivation (Adams 1965). The idea of there actually being ‘demoralisation costs’ for companies when this fairness failed to be achieved was first put forward by Michelman in 1967.

So how is a sense of fairness achieved within a company? The most obvious answer is remuneration. If employees feel that the money received for their hard work is not a fair amount when compared to the effort expected in doing the job, then they won’t feel particularly happy or motivated in their role. If they feel they are being paid fairly then they are much more likely to put a fair amount of effort into doing the job they are paid for. I know from experience (as I’m sure most of you reading this also do) that simply paying a fair level of salary is not a magic key to having a highly motivated team. So how are we meant to interpret this theory?

Money as a motivator has been discussed from many view points over the years.

Pepper et al’s study (2013), based on the motivation of senior Executives; shows a clear linear improvement between the amount being paid and the effort placed into performance (Pepper et al 2013). Akerlof (1982) falls very much in line with Adam’s Equity theory and Pepper et all’s research, holding fast to the argument that if earnings are less than the perceived fair wage then the level of effort input into the work will fall to reflect this, while being paid a higher amount will increase the level of effort being input. (Pepper at al 2013). However, Herzberg and his Dual Factor Theory argues the contrary stating that money and pay are ‘hygiene factors’ (Job dissatisfaction causes) rather than ‘motivators’. He argued that eliminating issues that fall into the hygiene factor category would stop dissatisfaction at work, but would not be able to improve motivation. Motivation, he argued could only be addressed by looking at ‘motivators’, and as such money should not be used as a reward due to its basic inability to motivate (Hertzberg et al 1959).

To me this sounds like paying a ‘fair’ wage is only enough to stop dissatisfaction. To actually achieve an increase in motivation, there must be seen to be some form of ‘extra’ reward above and beyond basic salary to act as a true motivator. Does it really matter though if this extra reward comes in a money form or in some other guise? I decided to take this question to the Magic Milestones Team and see what they thought. I was also interested to see if there was any difference of opinion between the Sales and the Operations Teams.

Everyone agreed that some kind of bonus/ reward scheme is indeed motivating for them. The Sales Team was quick to voice their opinion that they preferred the cash based bonus scheme that has been in place for a while, rather than receiving vouchers or prizes. However various other staff put forward ideas such as being able to earn extra holiday days due to good performance, or shopping vouchers that could be saved up and awarded for Christmas time. The idea was also suggested of a ‘friendly’ competition between members of the team or even between departments with alcohol or chocolates being awarded on a monthly basis to the team/ individual who wins. I came out of the discussion thinking that yes, money can play an important part in improving motivation but it isn’t the be all and end all. The team atmosphere and recognition of effort being put in also goes a long way.

The experiment we have been conducting over the last few weeks at Magic Milestones has shown me that by involving the team in target setting, supporting their work performance with regular feedback and helping them to gain a real ‘can do’ attitude, the level of motivation has continued and in many areas even increased. To keep the existing buzz going I think ensuring there is some form of ‘extra reward’ system in place is a definite win/ win situation. As well as motivating the team to go the extra mile it also helps to make sure they feel valued and appreciated. I think the decision on whether the reward should be money or an alternative, is something that needs to be decided upon for each individual team, as people don’t all value things the same way. Although money will be a powerful motivator for some, for others the opportunity to ‘earn’ extra days’ annual leave and a bottle of champagne may well be the perfect motivator.

Cheers everyone, and here’s to all of our highly motivated teams. Long may it continue!!!

By Helen Milanes Tidmarsh

One Comment

  • Hi Helen … great blog !

    I’m sure the following won’t ever apply to Magic Milestones as long as it retains its ‘family’ feel, but I thought I would share with you my observations on the topic, based mainly inside large blue chip organisations.

    As a Senior Manager working for a large blue chip telecommunications company for over ten years, we were drilled to death in the application of various motivational techniques

    What we soon found (working mainly with Technology teams) was that individual performance rewards and metrics turned out to be de-motivational for some key members of the team. The problem is that individual performance assessment across IT / Ops is often subjective and doesn’t always recognise the great work that many people do in quietly keeping the boat afloat.

    At the extreme end, one of my recent clients had a absolute hero in one of their offices, you know; the kind of guy that goes home after 8 o’clock every night and never takes holidays. As a result, this individual was always highly praised and was well looked after by the line manager for the team. Turns out (unsurprisingly); it made everybody else feel a little flat as they couldn’t even begin to compete due to their normal everyday family commitments. Can you imagine the response from the SMT when I declined their generous offer to recruit him onto my new Project ???

    In my role as an agile consultant, I feverishly discourage corporate performance assessments for individuals, as it flies in the face of the culture that as a method coach, I strive to achieve, particularly in Scrum. From an IT perspective, I’ve learned that what always lifts people a heck of a lot, is collectively celebrating TEAM success, measured anecdotally through successful outcomes in the eyes of the client or customer. The reward can be as simple as lunchtime Pizza / offsite trips to Burger bars etc …. Especially sweet if I can get the client to turn up and pay for it 🙂

    Liked by 1 person

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