Money can never be overlooked as a motivator. Money is often more than monetary value; it can also mean status or power, or other things.
It is said to be the ultimate motivator. I could agree more on this matter, for the following reasons;
First, money, like money, is likely to be more important to people.
Money is an urgent means of achieving a minimum standard of living, although this minimum has a way of getting higher, as people become more affluent.
Second, it is probably quite true that in most kinds of businesses and other enterprises, money is used as a means of keeping an organization adequately staffed and not primarily as a motivator.
Enterprises usually make wages and salaries competitive within their industry and their geographic area to attract and hold people.
Third, money as a motivator tends to be dulled somewhat by the practice of making the salaries of the Various-managers’ in a company reasonably similar,
In other words, organizations often take great care to ensure that people on comparable levels are given the same or nearly the same compensation.
This is understandable since people usually evaluate their compensation in light of what their equals are receiving.
Fourth, if money is to be an effective motivator, people in various positions, even though at a similar level, must be given salaries and bonuses that reflect their performance.
Even if a company is committed to the practice of a comparable wage and salaries, a well-managed need never is bound to the same practice for bonuses.
It appears that, unless bonuses for managers are based to a major extent on individual performance, an enterprise is not buying much motivation with them.
The way to ensure that money has to mean, as a reward for accomplishing and as a means of giving people pleasure from accomplishment, is to base compensation as much as possible on performance.
Compensation or Money as a Motivator: The Debate
Money is certainly an important motivator for employees; however, it is controversial to say that money is the primary motivator. This is a discussion that has to be put into perspective to find answers.
The analysis depends on the scope, the types of employees and how their basic needs are satisfied. Critics and experts are divided on this issue.
Experts belong to the classical school feel that the traditional carrot and stick method of motivation still works today. The carrot has been money and the stick has been taken in the form of physical, financial or social punishment.
Gone are the days when anyone would think that money or pay is not a motivator. It exerts a powerful influence on human behavior.
John Milton, the famous English poet said,” Money brings honor, friends, conquests, and resources”. A study states that stress decreases with income.
The study found that the lower the income, the higher the stress level is. The primary reason why people have to work is because of money.
Employers know this, and many companies reward outstanding employees with bonuses and cash rewards.
Most people are motivated by money, and cash is a fair and effective way for management to show appreciation to hard-working staff.
Classical management thinkers and scholars like F.W. Taylor and Adam Smith have tended to place money on the high scale of motivators.
They consider the employee as an economic man who is only motivated by money. They assumed that economic gain was everyone’s primary motivation. They designed reward systems for encouraging high performance by workers and managers.
Taylor and his associates believe that workers are lazy and aimless. They also believe that the money that employees earn is more important than the nature of the job they are doing.
Hence, people could be expected to perform any kind of job if they were paid enough. The challenge was to get them to the factory by paying decent wages.
Money award is important to employees for several reasons;
- Money is a reward for accomplishment and is a means of giving people pleasure from accomplishment.
- A person works because he or she has wanted that cannot be satisfied without money. The assumption has been that people will work harder and produce more if substantial financial rewards are placed before them. Money motivates people, and extra money motivates people to work extra. Employees compete to raise productivity or standards.
- It is not always possible to promote people, so money is a simple way to reward workers.
- Money is acceptable for all workers some may not appreciate a particular present, or some gifts may be insulting.
- It is quite true that in most organizations, money is used as a means of attracting and holding qualified people. This is why organizations make their wages and salaries competitive within their industry. Organizations often take greater care to ensure that people in comparable jobs are given the same compensation because people usually evaluate their compensation in the light of what their equals are receiving.Katz and Khan (1976) maintain that the money reward must be perceived as fair and equitable by the majority of organizational members, even those who will never seek the extra income.This is clearly explained by J. Stacy Adams (1983) in the Equity theory of motivation.
- The money must be perceived as directly related to the required extra performance and must be received immediately upon completion.
- It is almost certainly true that money can motivate only when prospective payment is large relative to a person’s income. But employees differ from the amount of money they want. For example, an extra dollar ten thousand may not be motivated to an executive who earns a dollar two thousand annually. This is why pay increases or bonuses should be large enough to motivate the receiver/employee.The annual pay increase in Bangladeshi firms is so low that it seldom motivates the receiver. They may keep the employees from being dissatisfied and from looking for another job.
- Money is likely to be more important to people who do yet meet their monetary needs. The monetary needs of some people are very urgent. Money is an urgent means of achieving a minimum standard of living. The majority of the employees in the world earn the minimum wage, which is not enough to meet their basic needs. In this case, we could say that money is the primary motivator for the majority of employees.Money is important because of the goods and services that it will purchase. This is the economic value of money. For some people, the money will always be of utmost importance, while for others it may never be.
- Money is often more than the monetary value. It also has social value. It is a social medium of exchange. It can also mean status or power. That is, it has a status value. The lure of money can lead to inappropriate and illegal actions. Many people in Bangladesh engage in insider trading that resulted in huge personal profit.
Behavioral scientists (Elton Mayo and Herzberg) on the other hand, tend to place money low. They give arguments against money as a motivator.
Mayo and his associates found that better physical facilities or increased economic benefits were not sufficient motivators in increasing productivity.
They concluded that other factors were responsible. In effect, the emphasis shifted to psychological and social factors, in addition to economic forces.
People are also motivated by having autonomy, but more money does not often provide greater perceived autonomy.
The real heart of autonomy as a motivator, however, rests on the perception that a person is executing his own decisions without a lot of oversight or rules, which is hardly common in the corporate world today.
For example, University teachers and R&D people like more operational autonomy.
Non-financial rewards can be more efficient than cash and create a high impact on employee motivation.
There are many non-financial incentives such as employee satisfaction, morale, motivation interpersonal relationships, effective supervision, and group dynamics that might increase productivity.
These social needs are more important than money in motivating employees.
Human behavior in the workplace is much important in increasing productivity. The behavioral approach makes it clear that people are the key to productivity.
According to the advocates of this approach, technology, work rules and standards do not guarantee good job performance.
They advised managers to create and maintain an environment where employees make feel important and worthwhile. Employees should be allowed a bit of self-control and self-direction in carrying out routine actives.
Most successful entrepreneurs say that their primary motivation has been to build something lasting, not to make a lot of money. To an entrepreneur, money or profit is the by-product.
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 network and community and the like.
Money becomes the default motivator because it is measurable, tangible, fungible and trouble strikes when the prospect of a lot of money becomes the primary goal. That usually feeds a very self-serving emotion and greed.
It does not mean that economic factors or working conditions are less important for improving productivity. These experiments suggest that an office or a factory is not only a workplace but also a social environment in which the workers interact with each other.
In short, individual and social processes played a major role in shaping worker attitudes and behavior. This gave rise to the concept of the “social man”.
Money is better at attracting and retaining people than at influencing their behavior. Frederick Herzberg, who died in 2000, believed that the most effective way to motivate work behavior is by focusing on how people felt about their work itself.
From the motivational theories, it is apparent that there is no instinctive or basic need for money. Money is essentially an extrinsic reward rather than an intrinsic one. Money becomes important insofar as it can satisfy recognized needs.
Research suggests that money be capable of satisfying physiological, security and esteem needs.
If these needs are satisfied by other means, then the money is seen as having lower instrumental value and is not particularly useful in motivating performance or any other behavior.
There is some evidence that organizations may be experiencing problems by assuming that employees place a high value on monetary rewards. Pay does not always improve performance
Improved performance does not result from pay increases. Doing a job efficiently is a powerful motivator for many people. There is a strong relationship between motivation and satisfaction.
Economic rewards cannot ensure the satisfaction of a psychologically healthy person. Recent studies by David Rock and Jeffry Schwartz 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 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. 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.
Katzenbach, J.R and Khan, Z argue that 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 about lasting improvement in behavior. The informal elements of motivation are at least as important as the formal ones.
Money is not the primary motivator for employees, but it is essential to meet the most basic needs.
If physiological, safety and social needs are covered with money or alternative methods, and then a non-financial reward strategy is necessary to stimulate self-esteem and self-actualization factors.
Money is not a general panacea capable of compensating for all other organizational problems. Money can be a motivator, but not to the exclusion of other factors, including the job itself.
People are motivated by different things at different times. Some employees have financial goals, others have professional goals, and others have personal goals. The same incentives cannot work for all.