behavior.
Those of us who subscribe to the
Money Is Not The Best Motivator
: Jon R. Katzenbach and Zia Khan
http://www.forbes.com/2010/04/06/money-
motivation-pay-leadership-managing-
employees.html
There is no simple answer, but those
two were both in it for the money, it appears,
and there is ample evidence to suggest that
money may not be the best way to motivate
desirable behavior. In fact, it may be one of
the worst ways.
Most successful entrepreneurs say that
their primary motivation has been to build
something lasting, not to make a lot of money.
Certainly great professional leaders like Marvin
Bower, who built McKinsey & Co., John
Whitehead, the former Goldman Sachs senior
partner, and Supreme Court Justice John Paul
Stevens would tell us that their motivation
came from the work itself, and that the lasting
respect of others was far greater than money
as a measure of accomplishment. And very few
great artists are in it for the money. Money is a
byproduct, and usually a secondary one at
that, for such achievers.
Emotional sources of motivation are
more powerful, and they are best conveyed
informally in an organization through the
respect of peers, the admiration of
subordinates, the approval of one’s personal
network and community and the like. Money
becomes the default motivator because it is
measurable, tangible and fungible — and
trouble strikes when the prospect of a lot of
money becomes the primary goal. That usually
feeds a very self-serving emotion, greed.
What works better than money?
It depends on what kind of motivation
you’re after. Money is better at attracting and
retaining people than at influencing their
writings of the authority on motivation
Frederick Herzberg, who died in 2000, believe
that the most effective way to motivate work
behavior is by focusing on how people feel
about their work itself.
Recent studies by David Rock, an
executive coach, and Jeffry Schwartz, a
neuroscientist, have identified several
motivators that influence behavior more
effectively than money. For one, people want
to elevate their status. Organizations often
assume that the only way to raise an
employee’s status is by a promotion, but status
can be enhanced in many less costly ways. The
perception of status increases significantly
whenever people are given credible informal
praise for daily tasks rather than waiting for
annual results.
People are also motivated by having
autonomy, but more money doesn’t often
equal greater perceived autonomy. In fact, you
usually have to give up autonomy to rise up the
compensation ladder. The real heart of
autonomy as a motivator, however, rests with
the perception that you are executing your
own decisions without a lot of oversight or
rules, which is hardly common in the corporate
world today.
Similarly, feelings of relatedness and
fairness are motivators. They are determined
more by informal interactions, social networks
and daily perceptions than by money or formal
promotions.
This is not to suggest that money
doesn’t motivate. Certainly it encourages self-
serving materialism. But those who rely on
money as their sole or primary motivator are
on perilous terrain, particularly if they ignore
other more powerful and emotional sources of
human motivation.
 And the results are always the same.
Money just doesn’t matter much. Some use it,
most don’t. For those who do, it is but one
small element in a motivational arsenal. Their
primary focus is on finding emotional
connections, sources of pride, that they can use
to make each and every person they affect feel
good about their daily tasks. And they succeed
no matter how boring, difficult or unpleasant
the job may be.
Thus, they instill the kind of emotional
commitment that is never self-serving, never
short term and always energizing. Their secret
is that they use informal elements of their
organizations — personal networks,
relationships, feelings, values — to
counterbalance the formal. The more you rely
on money as your weapon of choice, the more
likely you are to encourage self-serving
behavior.
To avoid the money booby-trap remember:
–Emotional commitment dwarfs purely rational
compliance every time.
–Money encourages self-serving short-term
behaviors better than it motivates lasting
institutional achievement.
–An overreliance on monetary rewards
invariably erodes emotional commitment.
–Pride in one’s work itself is what brings on
lasting improvement in behavior.
–The informal elements of motivation are at
least as important as the formal ones.
http://blog.clarity.fm/how-money-can-hurt-
employee-motivation/
7 Reasons why
Money is not the
best Motivator
Prakash Jothiramalingam
http://devmanagement.wordpress.com/2007/0
9/26/7-reasons-why-money-is-not-the-best-
motivator/
Interesting Post on why money is not the best
motivator…
1. Industry Standard Salaries
Every so often, people look at the web
sites that show the industry standard average
salaries for their job. When you see that you are
earning the average (or perhaps a little more),
does this motivate you to work harder? The
answer is probably not, but if you see that you
are earning less than the average, this can be a
real de-motivator.
2. Postponed or Cancelled Raises
Many employees scour their contract
looking for the clause that indicates that they
will get an annual pay review. If every year you
get a raise then this is unlikely to motivate you
when it arrives. However, on the odd occasion
that the pay review does not provide a raise the
motivation drops very quickly. This is especially
the case when the biggest de-motivational
force, fear, appears because the reason for the
raise not being given is the under performance
of the company.
3. Other Peoples’ Salaries
Usually companies are very secretive
about the amounts that people are paid. Your
salary is based upon experience, length of time
at the company, skill sets, personality and the
supply and demand for your skills at the time of
employment. All of this can lead to serious
discrepancies between peoples salaries. When
two similar posts have different salaries, this
de-motivates the person with the lower salary
but has no real positive benefit for the higher-
paid employee.
4. Salary Grades
To avoid the problems of item 3, some
companies will use salary grades. This means
that everyone with the same job gets paid
roughly the same. Again, welcome de-
motivation for the person who works doubly-
hard with no return for their efforts.
5. Somebody Else’s Bonus
7. Performance Related Pay for Teams
There are many occasions where I have
been involved in a project with a bonus to be
given to the team on completion. This initially
motivates people to work very hard indeed,
usually hitting the same problems as with
unpaid overtime. Once the bonuses are handed
out though, the team may start to examine why
they each received the same monetary amount
when some worked harder than others and
some ‘did not pull their weight’. This can soon
destroy motivation. As another by-product, the
quickly-produced results may well be at the
expense of quality.
Why Money Doesn’t Motivate
by Pawel Brodzinski on January 6, 2011

http://brodzinski.com/2011/01/money-doesnt-
When bonuses are handed out to
motivate.html
specific people in an organization; usually
management or salespeople, does this motivate
I saw teams whose productivity
them to work harder? Probably not as they are
increased significantly just after bonus money
generally working to a target and over-
was promised. The problem is usually they
performing does not give any additional benefit.
were just tricking the system. They knew they
In fact, their over-performance could offset
could do the job in given time but it was better
their next target and be a definite disadvantage.
to slack at the beginning waiting for the magic
However, look to the people who feel they add
wand of extra money to be used. Then
as much to the business, if not more, and the
everybody got at full speed to save the project.
bonuses of other people can soon kill their
The only thing which surprises me is where the
motivation.
hell the management was and why nobody did
anything about that sick situation?
6. Paid Overtime
I know lots of examples of people
Once in a while, paid overtime can be a
working their asses off because project required
good tool. It is a way for an employee to make a
their extra effort. Usually they got a big bag of
little extra and maybe buy that new TV they
money at the end and everyone was happy.
were hankering for. However, when paid
Does it mean money motivated them? Well, I
overtime becomes a regular occurrence, it may
think we’re messing the cause with the effect
as well be unpaid. The energy levels of people
here. They didn’t start discussing with their
working too many hours drops, their
managers how much they were going to get.
concentration becomes poor, they make errors,
They just gave more, because they thought it
lose contact with friends and family and
was a right thing to do (I know I totally
become very unhappy. This really is not a
oversimplify here, but we won’t discuss
motivational factor.
everyone’s individual drivers here, will we?)
Then the effect usually was they got some
extra money, which was of course completely
fair.
And for the end, if money motivates
people my question is: why they don’t get
more and more motivated as they get more
and more money? I gave quite a lot raises and
huge piles of extra money in my career and my
observation is it makes people happy. Happy,
not motivated. They’re engaged as they were.
They give a lot, as they did. But somehow they
don’t seem to be motivated better.
Motivation–It’s NOT all about the Money
Posted on August 28, 2012
http://intagreat.wordpress.com/2012/08/28/m
otivation-its-not-all-about-the-money/
Motivation has become a buzzword in
the business community. It is commonly listed
as a required skill on job descriptions, and
resumes routinely boast of the individual’s
“motivational abilities.” This emphasis on
motivation has led to the popularity of
motivational authors and speakers—some good
and some bad. Even the popular television
show Saturday Night Live has parodied our
culture’s fascination with motivational
speakers—living in a van down by the river
anyone?
The question becomes why is
motivation receiving so much attention? To
some extent, the increased interest in
motivation is parallel to the increased interest
in leadership and has resulted in the
development of many different motivational
theories and processes. Of these many
theories, Herzberg’s motivator-hygiene theory,
path-goal theory, and McClelland’s learned
needs theory all stand out and can play an
important role in organizational leadership.
One of the most common ways leaders try to
motivate employees is by implementing various
financial rewards. Leaders often hand out
more money as a motivational solution
because it is relatively quick and easy.
Unfortunately, it is not usually as effective as
the leader would like. Herzberg’s motivator-
hygiene theory explains why this is often the
case.
The main premise of the motivator-
hygiene theory is that every job has hygiene
factors and motivators. Hygiene factors need to
be present for an individual because their
absence creates an unsatisfying experience;
however, increasing hygiene factors does not
increase satisfaction, rather it brings the
individual to a neutral state (Steers, Porter, &
Bigley, 1996). According to Herzberg, hygiene
factors include one’s salary and other financial
incentives; “concerns such as pay…are less
capable of energizing workers to higher levels
of performance” (Hill, 2008, p. 174). This is
because only motivators can create
satisfaction. Motivators include opportunities
for achievement, recognition, the work itself,
and growth.
Other authors have since agreed with
Herzberg. For example, Pfeffer and Sutton
(2007) state, “so making mistakes in pay can
cause people to withhold discretionary effort,
ideas, and information…financial incentives
have a potent impact on performance, but not
necessarily in the positive ways that executives
and their advisers anticipate” (p. 5). So in other
words, if an individual feels as though he or
she is not being paid fairly, he/she will
be demotivated. However, once the equity
threshold is met, paying that
individual more money will not increase their
motivation. Kohn (1993) also supports
Herzberg’s research by concluding,“Managers
often use incentive systems as a substitute
for…treating workers well – providing useful
feedback, social support, and the room for
self-determination….” (p. 6). One way leaders
can provide this useful feedback, support, and
independence is by utilizing the path-goal
theory of motivation.
According to Northouse (2010), path-
goal theory involves leaders who “try to
enhance subordinates’ goal attainment by
providing information or rewards in the work
environment…” (p. 125). More specifically, the
way leaders enhance followers’ goal
attainment is by understanding their followers’
unique characteristics and challenges and then
responding with the appropriate leadership
behaviors. For example, providing a brand new
employee with extra attention and precise
direction may be helpful as she learns about
her position and the organization; however,
those same behaviors can be interpreted as
micro-managing by someone who has been with
the organization for a longer period of time.
Applying McClelland’s learned needs theory is
another way to better understand subordinates’
unique characteristics.
According to McClelland’s learned
needs theory, there are four primary
motivations, and individuals acquire certain
needs based on their experiences. Therefore,
everyone does not share the same prominent
needs or combination of needs. The four
motivations are: (a) need for achievement, (b)
need for power, (c) need for affiliation, and (d)
need for autonomy (Steers et. al., 1996).
Those with a need for achievement
tend to be competitive and have a high
standard of excellence. Individuals with a need
for power have a desire to control their
environment and be responsible for the
behavior of others. People with a strong need
for affiliation want to develop and maintain
strong relationships with others, and they get
their validation from those relationships.
Finally, those with a need for autonomy
want to control their own work and dislike
many rules and regulations. Therefore, while
someone with a high need for affiliation may
find the opportunity to work with a team on a
project motivating, someone with a high need
for autonomy would most likely be demotivated
by that same prospect.
Overall, Herzberg’s motivator-hygiene
theory, path-goal theory, and McClelland’s
learned needs theory work well together and
have the potential to turn motivation from a
buzzword into a powerful organizational
leadership tool.
Referenced Works:
 Kohn, A. (1993). Why incentive plans
don’t work. Harvard Business Review,
71(5), 54-63.
 Northouse, P. G. (2010). Leadership:
Theory and practice (5th ed). Los Angeles:
Sage.
  Pfeffer, J. & Sutton, R.I. (2007). Do
financial incentives drive company
performance? Boston: Harvard Business
School Press.
 Steers, R.M., Porter, L.W., Bigley, G.A.
(1996). Motivation and leadership at
work. (6th ed.) New York: McGraw-Hill.

Money Is Not a Motivator

http://spinsucks.com/entrepreneur/money-is-
not-a-motivator/

So, in this economy, when no one is

getting raises, people are leaving Google in
flocks for companies that are more nimble
because they want to see their efforts affect
change.

We want to see our work rewarded in ways

more than just pay. We want to see we are
affecting change. Sure, we want to make
money, but that’s not what motivates us.
We’re human beings and, because of that, we
have forgotten about our raise a week after we
receive it. But what keeps us motivated, day
after day to get up and go to work, is the
feeling that we’re part of something.