NO IT DOESN’T, TIM! YOU ARE AN IDIOT!
Well, you’re half right! I’m an idiot most of the time, but finally we are beginning to see what I’ve been saying for a decade, money is still the best motivator when it comes to getting extra effort.
For almost a decade the media and influencers perpetuated this belief that it was other things, rather than money, that motivated individuals to do more. They sited weak studies, if at all, but mostly it was antedotal evidence from people saying it wasn’t money, it was time off, it was feedback, it was…
A recent study puts this to rest, and it clearly shows that if you want ‘extra’ effort out of an employee, money is the single biggest motivating factor, overall, to get the effort your organization is looking for.
What I love about this study is they went out to over 200 experts in the field and first asked them what they thought. They were comprehensive in their analysis of the results and the most recent literature on the subject and the findings were straightforward:
We find that (i) monetary incentives work largely as expected, including a very low piece rate treatment which does not crowd out incentives; (ii) the evidence is partly consistent with standard behavioral models, including warm glow, though we do not find evidence of probability weighting; (iii) the psychological motivators are effective, but less so than incentives.
Psychological motivators are effective, but less so than monetary incentives!
It’s not that things like working for a great leader or having time off aren’t also effective motivators to getting extra effort out of your employees. They are. But we have to stop telling ourselves that they are more important, because they aren’t!
Again, this is overall. You might have some individuals working for you that are more highly motivated by non-monetary incentives. But overall, in a large workforce, money will still get you better results.
So, why do we love saying that it’s not about the money?
If you think about how this concept became popular, it really tells the story. A decade ago we were coming out of the Great Recession. We didn’t have a ton of money to throw around, so it became popular to espouse the idea that people were really motivated by other things, rather than money.
And, it wasn’t really a lie. We are motivated by many things, money just being one.
The lie was that the other things motivated us to a higher level than money. Those don’t. I’m completely motivated by a great leader, if I’m getting paid what I think I should be. I’m super motivated by extra time off, if I think I’m getting paid what I should be. I’m not motivated by any of that, if I have a monetary issue I’m facing in my life, which most people do.
If my partner is a successful doctor and she makes way more than we need to live very well, money isn’t my primary motivation for effort, it might be a lot of other things. But, if I’m struggling to pay my mortgage, and my kid is about to go to college, I could care less that my boss is nice to me. Just pay me!