Can you PAY people to get them motivated?

We have this interesting term called pay for performance. It might make you think that you could pay people to motivate them to perform better. Research after research (28 total) have been completed that show that extrinsic rewards decrease intrinsic motivation. Rewards do not directly increase performance. Rewards have a distinct role in talent management; however, we should understand what their purpose is to be able to get the most out of the investment.

NO – You can’t motivate people with money.

A well known motivation theory by Herzberg categorizes motivational factors into two categories: Motivators and dissatisfiers, also known as hygiene factors. Motivators such as career development and meaningful work can increase the employees’ motivation. Hygiene factors can only reach a neutral level of satisfaction. If they are good, nobody thinks about them. If they are lacking, they cause dissatisfaction. Compensation falls into this category.

YES – You can motivate people with money

You could say that it is possible to increase motivation with money, if you are in the area of dissatisfaction – if they are underpaid. You can improve the compensation, until you reach the neutral level. After that, pay becomes a non-issue.

There is also one exception to the pay-reward connection. Some research suggests that in work that is repetitive and doesn’t require much thinking or judgment, pay actually has a direct link to performance. How many of today’s employees have jobs like that?

What’s the point of pay for performance then?

We pay our best performers because we want to KEEP them. Increase in compensation significantly increases the intent to stay. When the organization is dishing out rewards, the operative question should be: Who do we want to keep? Pay for performance is often expected by employees as well. They feel that it is fair that those who contribute the most should be rewarded the most. It is essential that what is perceived as good performance by management is perceived as good performance by the employee base. Clear performance standards are one of the strongest drivers of performance.

If you can’t motivate people with money, then what?

That’s another story, read here.

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