TITLE: HOW EFFECTIVE IS MONEY IN MOTIVATING INDIVIDUALS TO PERFORM BETTER AT WORK?
“Motivation is the number one problem facing business today” (Watson, 1994) and money has been instrumental for modern businesses to use as a motivator at the workplace. The intention of this essay is to attempt to answer the question of how effective is money at motivating individuals to perform better at work. The possibility of money being the best motivator for employees will also be discussed. It will investigate previous motivations theories which attempted to answer the same question and will analyse eight theories ranging from “content to process”. Furthermore, it will critically evaluate how motivation theories help us understand the relationship between money, motivation and performance and whether motivation is purely influenced by money. Finally, it will look at how these motivation theories express their view of how money affects employee performance at the workplace presenting a balanced decision on how best individuals can be motivated (extrinsically or intrinsically) to perform better at work.
Whilst researching this subject, it became apparent that most motivation theories accept the fact that money as a reward can motivate individuals at some point to perform better at work. “Taylor believed pay to performance can affect motivation and money was the only significant motivational factor in the workplace” (Bratton et al. 2010 p.49). To illustrate, the film Wall Street (1987) highlights that greed for money is good and is right. However, it is important to note that money as a reward can cause conflict and jealousy, which in the end can hurt satisfaction and productivity and likely to upset people rather to motivate. To illustrate, in a telesales environment, a low salary and commissions based sales can lead to mercenary behaviour through the need of selling in quantity to increase bonus. It presents a logical concept as how some type of rewards systems can produce negative results. Whilst it is generally agreed that money can cause job dissatisfaction, some workers from a store in New York won millions in lottery, yet kept working because of motivation they had (Mail, 2011). Some people would prefer to keep their job and lifestyle purely because of the recognition they already possess at work, meaning money would not be effective to persuade the individual to work harder, thus presenting a restricted analysis of money being the main motivator as Taylor believed.
Elton Mayo was most closely related to Hawthorne studies, which concluded that more than just economic incentives greater communications and improved human relations led to increased productivity and performance. Although there were no clear relationship between the factors and productivity, recognition and social cohesion were important too (Bratton et al. 2010 p.52). The workers are not only motivated by economic incentives but they also want to be praised and recognised for the work done. In his work, McGregor (1960) in Frick and Drucker (2011) acknowledges this and places money in his “Theory X” category and considers it as a poor motivator. Praise and recognition are placed in the “Theory Y” category and are considered stronger motivators than money. Likewise, McClelland also noted that “workers could not be motivated by the mere need for money; in fact, extrinsic motivation (e.g. money) could put out intrinsic motivation such as achievement” (Lawler, 1973). This means financial rewards (e.g. money) could be effective if used as an indicator of success for a range of reasons e.g. keeping the productivity and performance levels stable.
Maslow’s Hierarchy of needs theory believed that as “one began to satisfy one set of needs then the individual would start to have higher needs and satisfying that level of need became their motivator and placed...