As people have different needs therefore money’s significance cannot be denied in

any era. It is the primary objective of most people to attain the optimum benefits for
their efforts in life. Everyone is striving hard to fulfill his/her needs in order to occupy
a reasonable position in society.

Never ending necessities and desires compel a person to work day in and day out.
All these efforts are centered towards fulfillment of financial obligations. Recent
recession has resulted in enormous rise in inflationary rate, affecting the whole world
and making lives more mechanical, resulting in further stress, frustration and
economic pressure in general.

Now employees require improved salary packages since monetary benefits are the
primary source of attraction towards the job for most people, where they can survive
and fulfill their requirements once they are done with the basic necessities.

In my opinion, monetary benefits exclusively cannot stimulate employee

performance. Besides, formulating reasonable salary packages, employees can be
motivated by creating inspiring work environment, enhancing two way
communication, increasing job satisfaction, providing encouragement and rewarding
them for their valuable (individual/team) contributions as well as having fun along
with work.

It is a comprehensible fact that when an individual is at his/her entry or middle level,

his drive for monetary benefits is at a higher side in most cases as compared to
those, who are working at a superior level. Senior employees by and large seek
recognition along with monetary benefits as they wish to satisfy their self esteem and
professional ego. Therefore they require greater ownership in what they do.

The needs and priorities change at different levels, even a single homogeneous
salary proposal cannot please and satisfy everyone, despite the fact that they are at
the same work level because people also differ in their approach towards life.
Furthermore, monetary gains can only be used to retain employees on a short term
basis. One cannot expect to retain prospects with a never-ending endowment of
bonuses and increments – as financial limitations are always there.
In a nutshell, if companies intend to fairly reward and recognize employees, they will
be happier, stay longer and will be more productive. In my opinion, “money is the
biggest motivator, yet not the ONLY motivator.”

What are thoughts on this? Are there other ways to stimulate employee performance
besides a good salary package?

It depends on the person, yet I think money is the primary motivator for most people.
It becomes less of a motivator when people have satisfied their basic needs. Some
need large amounts of money to satisfy their basic needs. One of the problems with
asking if money(or some other thing) is the biggest motivator is the question forces
you to choose one thing. A leader who has vision and foresight is going to evaluate
the needs and desires of people first. Then that leader is going to develop a plan that
includes many things that stimulate employees. That will include money, titles,
awards, recognition, pride, etc. Napoleon, who started giving ribbons for bravery,
was amazed that people were willing to die for a piece of shiny cloth attached to their
uniform. It’s not one thing that motivates, but many things.

I think a goal and its achievement is the biggest motivator and money is the reward.
Money is a need to live a desired life style. If companies would focus on an
environment where people are happy (CSR, environment, organizational structure)
and challenged, where achievement is recognized (there are hundreds of ways to do
that) and everybody would clearly work towards a vision motivation would naturally
be inspired. Why did I write if? Quiet often:
Recruitment does not use opportunity to set expectations right from the start
Training is provided as a process but confidence is not ensured
Companies vision is set but not clearly communicated
Commitment is not managed
People are not included in strategy design
Performance is not agreed, supported and measured on a regular basis
Lack of appropriate communication across the board

Money is a basic expectation and dictated by the market. In sales it can motivate to
some extend but hey in 2009 we have to consider much more than money if we want
to be seen as top employers.
The design of an employee's job can have a significant effect on their job motivation. Job
design includes designing jobs that create both a challenging and interesting task for the
employee and is effective and efficient for getting the job done.[4] Four approaches to job design
are:

1. Job Simplification: The goal of this job design approach is to standardize and specialize
tasks.[5] This approach does not always lead to increased motivation because the jobs
can become mundane over time.
2. Job Enlargement: The goal of this job design approach is to combine tasks to give the
employee a greater variety of work.[5]
3. Job Rotation: The goal of this job design approach is to move workers to different tasks
periodically.[5]
4. Job Enrichment: The key to job design employee motivation, this approach aims to
enhance the actual job by building up the employee through motivational factors.[5]

Several studies validate the effectiveness of using job design techniques to increase employee
motivation. A study conducted by Campion and Thayer [6] used a job design questionnaire to
determine how job designs fostering motivation affected employees. Campion and
Thayer [6] found that jobs with more motivational features have lower effort requirements, a better
well-being, and fewer health complaints. The study also found that jobs scoring high on the
motivational subscale of the questionnaire contained employees who were more satisfied and
motivated, had a higher rating pertaining to job performance, and had fewer
absences.[6] Hackman.[7] conducted a study pertaining to work redesign and how redesigning
work could improve productivity and motivation through job enlargement or enrichment. The
study's results found that redesigning a job can improve the quality of the product or service that
is provided, increase the quantity of work, and can increase work satisfaction and
motivation.[7] The last study on job design was conducted by Dunham, [8] who wanted to
determine if there was a relationship between job design characteristics and job ability and
compensation requirements. Dunham [8] believed organizations were overlooking job ability
requirements and compensation when they enlarged or enriched employee's jobs. The study
found that organizations were not taking into account the increased job ability requirements that
job enrichments or enlargements entail nor were the organizations increasing compensation for
employees who were given extra tasks and/or more complex tasks. [8]

Rewards[edit]
Using rewards as motivators divides employee motivation into two
categories: intrinsic and extrinsic motivation. Intrinsic rewards are internal, psychological rewards
such as a sense of accomplishment or doing something because it makes one feel good.
Extrinsic rewards are rewards that other people give to you such as a money, compliments,
bonuses, or trophies. This applies to Douglas McGregor's Scientific Theory that formed Theory
X[9], which applies to the extrinsic wants of employees. The basis for the motivation is supervision
structure and money. Scientific Theory is based on the grounds that employees don't want to
work so they have to be forced to do their job, and enticed with monetary compensation.Theory
Y, also derived from McGregor's theory, says that employees are motivated by intrinsic or
personal reward[9]. With this theory different factors can be used to heighten the intrinsic benefit
that employees are receiving at their job."

Many studies have been conducted concerning how motivation is affected by rewards resulting in
conflicting and inconsistent outcomes. Pierce, Cameron, Banko, and So [10]conducted a study to
examine how extrinsic rewards affect people's intrinsic motivation when the rewards are based
on increasingly higher performance criteria. Pierce et al.[10]found that rewarding people for
meeting a graded level of performance, which got increasingly more difficult, spent more time on
the study's activities and experienced an increase in intrinsic motivation. Participants who were
not rewarded at all or only rewarded for maintaining a constant level of performance experienced
less intrinsic motivation.[10] Another study that examined the effects of extrinsic rewards on
intrinsic motivation was conducted by Wiersma.[11] Wiersma [11] conducted a meta-analysis to
summarize the inconsistent results of past studies. The meta-analysis by Wiersma [11] concluded
that when extrinsic rewards are given by chance, they reduce intrinsic motivation. This result is
supported when task behavior is measured during a free-time period.[11] However, it is not
supported when task performance is measured when the extrinsic reward is in
effect.[11] Wiersma [11] also found that these results cannot be generalized to all situations. A study
conducted by Earn [12] also examined the effects of extrinsic rewards on intrinsic motivation.
Earn [12] wanted to know if extrinsic rewards affected a person's intrinsic motivation based on the
subject's locus of control. Earn [12] found that pay increases decreased intrinsic motivation for
subjects with an external locus of control whereas pay increases increased intrinsic motivation
for subjects with an internal locus of control. The study also found that when the controlling
aspect of the extrinsic reward was made pertinent by making pay dependent on a certain amount
of performance, higher pay undermined the intrinsic motivation of subjects and their locus of
control was not relevant
Money isn't a motivator

Believe it or not, when it comes to employee motivation, money isn't as important as

you might think. Sure, you need to pay your employees fairly and competitively. If
people working in your sector in your area of the country are paid on average $18-
$20 per hour, you won't be able to get away with paying your employees $14 per
hour. But once you pay competitively, it's not wages that keep your employees going
above and beyond every day, it's something else. And interestingly enough, even if
you paid your employees more than the average in your region, you still wouldn't
keep them motivated on an ongoing and sustainable basis.

Focus on intrinsic factors

Now before I incur the wrath of many, let me explain: lack of money is a de-
motivator, but money is not a motivator. This somewhat puzzling statement makes a
lot of sense if you consider a now-classic study conducted by Frederick Herzberg in
1968 (which was subsequently revalidated in Harvard Business Review in 2003).

In his research, Dr. Herzberg discovered that the factors that produced job
satisfaction were separate and distinct from those that led to job dissatisfaction. In
other words, job satisfaction and job dissatisfaction are not opposites of each other.
Instead, the opposite of job satisfaction is no job satisfaction; and similarly, the
opposite of job dissatisfaction is no job dissatisfaction.

He called the factors that led to job satisfaction intrinsic factors (or motivators) and
those that led to unhappiness on the job extrinsic factors (or de-motivators). Salary is
an extrinsic factor, so poor wages will result in job dissatisfaction, but reasonable
wages can only achieve the somewhat neutral position of no job dissatisfaction. In
other words, once you offer a "fair wage", for your employees to be inspired to go
above and beyond on a long-term basis, you need to focus on intrinsic factors.

So what are these intrinsic factors? Dr. Herzberg identified some of them as
achievement, recognition for achievement, the work itself, responsibility, growth,
and advancement. Extrinsic factors, those that lead to job dissatisfaction, were
company bureaucracy, a lousy immediate supervisor, unpleasant working
relationships, poor working conditions, status, job security, and money.

Practically speaking

So, as a leader, what does this mean when it comes to inspiring the troops? There are
two things to consider. First, appreciate that extrinsic factors must be addressed
before you can realize any value from focusing on the intrinsic factors. Bureaucracy,
poor leadership skills (on your part), employees who don't get along, wages that are
not competitive, and poor working conditions will all lead to poor morale and cause
staff to jump ship as soon as they get the chance. You've got to get these (at least
partially) fixed first.

Second, once the extrinsic de-motivators have been lessened, shift your focus to
using a variety of intrinsic motivators. When it comes to motivating employees,
there's no such thing as one size fits all. Different people are motivated by different
things.

Having said that, the top two intrinsic motivators are a sense of achievement, and
recognition for achievement, so these are a reasonably good place to start. A sense of
achievement often comes from the ability to take something from start to finish and
observe the final outcome. So ask yourself – what can I do to get my people
participating and involved from beginning to end? Recognition for achievement is
valued differently by different employees. Some people prefer public recognition,
others favour a private "thank-you". Take the time to find out what your individual
employees are inclined towards; the impact of any recognition you give will be much
greater.

If you have employees who are apathetic and uninspired, then throwing more money
at them isn't the solution. Sure, none of them are going to turn down a raise (they're
not stupid), but if you're seeking to build highly-motivated and high-performing
employees, your greatest return on investment will come, once you pay them fairly,
in two steps. First, focus on removing from your work environment as many extrinsic
de-motivators as you can. And then second, concentrate on amplifying individually
what intrinsically motivates each one of your employees.

Merge Gupta-Sunderji (@mergespeaks) is a speaker, author and consultant based in

Calgary. Reach her or join the conversations on her blog at
Nearly everyone believes that money is the best motivator, and people can
indeed be motivated by money, but here are some reasons why bosses
might want to re-consider using money as a work motivator.

1. We Don’t Use Money Efficiently. This is a bit complex. Most employees

are paid for time (hourly, weekly salary), not performance. In reinforcement
terms, this is a fixed interval reward system. We know, from research, that
paying people for their time, rather than paying them for performing work
behaviors, is inefficient. Commissioned salespeople work hard. Why?
Because they are paid on a variable ratio schedule – the more sales
pitches they make, the more sales (and the variable part means they never
know when they are going to hit pay dirt!). So, money, for most workers on
hourly/salary isn’t highly motivating.

2. Most Raises Aren’t Substantial Enough to Be Motivating. Research on

motivational thresholds suggest that for a pay raise or bonus to actually
lead to an increase in motivation and performance, it needs to be
substantial – at least 5-7%. Most raises and bonuses aren’t that high, so
they likely have minimal motivational impact.

3. Money May Not Be Your True Motivator. Money is correlated with power
and status. Some people are motivated more by the power than the actual
buying power of money. There are vast individual differences. Given a
living wage, many people value other rewards – meaningful work, good
colleagues, prestigious work – more than money.

4. We Don’t Make the Money-Performance Connection Salient. Partly

because of the way that we pay/reward people (see #1 and #3), workers
may not see the connection between the behaviors they perform and the
money they receive. Again, paying people to be present at the job site,
doesn’t ensure they are working. And, if we can’t measure their
performance adequately, as a boss, you’re really screwed.

5. Money is Expensive. In most organizations, budgets are tight. Relying on

money as an incentive is very limiting. Good bosses learn the value of
other sorts of non-monetary rewards, associated with recognition, a valued
parking spot, etc.
Money is not a motivator, money is a necessity. People need money to pay for their homes,
their food, their cars, to send their children to school, to pay for medical expenses, to take
vacations. Money is a necessity for life. The lack of money will certainly motivate someone
to get a job to be able fulfill their needs and the needs of their family, but by and large, it will
not motivate the vast majority of people to excel. If money and the pursuit of more money
was really what motivated most people then everyone would be fighting to become to next
Wolf of Wall Street, but they are not. People are engineers, computer programmers, HR
professionals, writers, legal professionals, and on and on through thousands of professions
that are never going to make them millionaires.

No business should think of money as a key motivator that will allow them to attract or retain
great talent. This is important, so I will say it again. No business should think of
money as a key motivator that will allow them to attract or retain
great talent. Without a doubt, there are some companies that can pay better for the same
skills than others, but that fact in and of itself will not be enough to attract and retain the best
people.

On the flip side, there is no doubt that there are companies that take advantage of an unstable
job market and pay very poorly. In this case, employees will be motivated by economic
necessity. They will be quite motivated to leave. In the situation that the job market and
prospects are poor, money will motivate a person to try and keep their job, but overall they
will only be motivated to do just enough to keep their job and no more.

As a recruiter, I have seen it over and over again where great candidates are not motivated to
look at new job opportunities by money; the money is simply a non-issue. Don’t get me
wrong, the economics of the situation need to make sense for the candidate to be willing to
close the deal and make the move, but in the end, that is simply figuring out the logistics of
the situation to make it work for both the candidate and employer.

Great candidates are motivated by the work that they do, their ability to do more and be more
influential, and by the people and team that they will work with. In his book “Drive: The
Surprising Truth About What Motivates Us” Daniel Pink discusses the three key elements
that motivate creative people: Autonomy, Mastery, and Purpose.

Autonomy: the ability to be self-directed

Mastery: the need or desire to continually improve

Purpose: the need to be dedicated to, and belong to something bigger that one’s self
For this post, I’ll focus on Mastery and Purpose.

Mastery: Guitar playing Canadian Astronaut Chris Hadfield once dedicated several weeks
of his life to mastering the song “Rocket Man” by Elton John on the off chance that he might
get to play the song with the music legend at an upcoming event. He didn’t get the
opportunity, and of course guitar playing has nothing to do with the real work of being an
astronaut, but it is an example of how he lives his life; always trying to master new things.
From the age of 9 years old, long before Canada had a space program, Chris knew he wanted
to be an astronaut and dedicated his life to mastering skills and tasks that would allow to him
achieve that goal of going to space. (Read Chris Hadfield’s book: “An Astronaut’s Guide to
Life on Earth”.)

Great candidates and employees alike share this same type of motivation. They are always
trying to master new skills and knowledge and want to be in a position that will allow them to
do so.

Purpose: Being driven by purpose does not always mean having noble goals like feeding
the world’s hungry or curing cancer. It can be as simple as finding purpose in developing
amazing products that create great value for customers, or working with a team of likeminded
individuals dedicated to their craft, whatever that may be. It includes a sense of belonging to
something that you feel is noble and worthy, again whatever that may be.

On a very personal note, as a recruiter, I find great purpose and satisfaction in working with
teams and hiring managers, getting to know them and what they are trying to accomplish, and
then helping them find the best people that fit their teams and will further their goals. By the
same token, I love getting to know candidates and what it is that they want out of their
careers. When I can bring together candidates and teams whose goals and aspirations fit
perfectly together, well, that is simply an amazingly fulfilling experience.

This is the point really. Whether you are trying to attract and recruit great talent or retain it,
you need to understand the true motivations of candidates and employees alike and create an
environment that fills those needs. If you think that money is going to be all that you need to
hire and keep good people, think again. Money, bonuses, stock options, and the like are
necessary and great to have, but not the things that will motivate great people.