Chris Croft's Personal Blog

May 21, 2012

Is money a motivator?

I had an argument with an arrogant tyrant today who was convinced that most people are only motivated by money.  “They wouldn’t come to work if you didn’t pay them!”

I think the truth is that money makes people do things, but it doesn’t make them WANT to do things.

“What’s wrong with that?” you ask.  As long as it gets the results.  But my point is that money will only get you the minimum that you’ve paid for – you’ll never get your people to go the extra mile, to be creative, to give great quality, to CARE.

In fact money does the reverse.  Once there is a bonus to be had, you get the following problems

1 – it will always be seen as unfair, and demotivate lots of other people

2 – the focus will be on the money, and things like “Doing something worthwhile” or “helping customers” are more likely to get forgotten

3 – the focus on the money means that anything that isn’t paid for won’t get done.  And you can’t pay for everything, so important things won’t get done in the rush for the bonus.

4 – people will be amazingly creative in finding ways to cheat.  All that effort that could have been put into looking after customers.  And all that extra expense that you will have to pay out as the bonuses creep upwards.

5 – How do you set the bonus?  There will be pressure for low targets, which is exactly what you don’t want if you are trying to be worlds class and reach for the sky.  Everyone should be ambitious and prepared to take risks.  They won’t do this if bonuses are at stake.

The question I would ask you is “If I arranged for you to be paid a bit more, would you work harder?”  I really hope the answer is no, because if the answer is yes then you already don’t really care about your job and you are wasting 5 days out of 7 of your life and you need to find a better use of your time!  Given that you HAVE to work to live, you might as well do the best you can once you’re there.  Otherwise, how do you live with yourself?

Similarly the question “If I arranged for you to be paid a bit more, would you do better quality work?”  For the same reasons as above, I really hope the answer is no!

Of course if your pay was cut then you might work less hard – motivation is asymmetric, and money is a hygiene factor.  But this is irrelevant, the question we are discussion is whether bonuses will motivate people.

Once you have a bonus culture then you’re stuck with it.  Taking the bonuses away will indeed reduce motivation, so yes, those people are indeed working for the money, because they have been damaged.  They no longer care about the bigger picture, just themselves.  As do people who have had bad management in the recent past.  They no longer care.  It’s not their fault, it’s a result of how they have been treated. They are now damaged.  You’ll never be world class, or compete, or even survive in the current climate, unless all your people care.

How to get them to care?  Well not with money, that’s for sure!  It has to be involvement, understanding the vision and their part in it, recognition and thanks, teamwork, interesting work, continued learning, ownership and belonging.  Not as easy as money but a lot more effective in the end!

Should better people be paid more?  I think yes.  How to do this?  Promote them to bigger and better paid jobs.  But while they’re doing a job then it’s inflation pay rates or whatever, the same for all.

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1 Comment »

  1. The other problem with bonuses is that they can be a perverse incentive. I have seen badly-designed bonuses rip organisations apart, because individuals were incentivised to make sure business went through their local profit centre, often at the expense of the overall corporate good.

    Comment by Martin — May 21, 2012 @ 8:51 pm


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