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Cash Disincentive: How Money Can Kill Motivation

Cash Disincentive: How Money Can Kill MotivationA few months ago I had a lengthy and very engaging conversation with freelance writer, Diane Peters, on using money as a motivator. She’s just published an excellent article in CPA Magazine with further research and practical tips on this critical management issue.

Here are a few of Diane’s key points from “Cash Disincentive” that really stood out:

• Instead of stewing over numbers, put your energy into great management practices to make sure the non-monetary aspects of the workplace are as motivating as possible.
• Be careful about hiring people motivated by pay increases. Carefully screen for values and motivations that align with organizational culture.
• One study showed that when staffers know they will get a reward, it reduces their motivation for the task by 36%.
• Money is a poor substitute for great leadership. If you run your team using the best practices of business management, money can be transformed from a perplexing problem into a tool used sparingly.

I’ve researched and written extensively on reward and recognition. You can find a series of my book excerpts and articles at Recognition, Appreciation, and Celebration. At the bottom of the page is an article on how “Weak Leaders Try to Use Money As a Motivator“.

I’ve also written a series of blog posts on this topic at http://www.clemmergroup.com/newsletter/category/recognition-appreciation-and-celebration. There’s a link to a study referenced in Fortune (“Motivate Without Spending Millions”) you might want to read in the post “Avoid Motivation Madness: Little Rewards and Small Recognition can Produce Big Payoffs“.

Below a certain point the lack of money or perceived unfairness is demotivating. But once most people feel they’re fairly compensated, money fades to the background. Then recognition, celebration, and appreciation becomes much more energizing.


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