Why Money Doesn’t Motivate Employees

For many people, work is simply not working out. The latest survey from Gallup shows that only 36% of US employees were actually engaged in their work, while 15% of employees were marked ‘actively disengaged’ in the year 2021. Engaged and motivated employees matter, big time. They are crucial to driving business productivity, profitability, and customer service—and finding and keeping top talent is a constant issue for every business.

In many companies, money is the most frequently used motivator — even though research shows that financial incentives are a poor choice to change behavior. In fact, behavioral research from the Harvard Business Review reveals that monetary rewards or incentives produce only temporary compliance for the short term period. Sure, money is important so people can pay their bills and provide for their families — but once these fundamental needs are met, the psychological benefits of money are debatable. In fact, there is little correlation between pay and job satisfaction levels — even across cultures and geographies. To further shed light on this point, there is research from Kruger and Rootman on seven elements of employee motivation, which shows that while financial rewards can motivate employees, there are other major elements that persuade them to work productively, including: job interest and meaningful work, recognition and feedback, workplace justice and fairness, strong leadership, working conditions, and milestone rewards. 

People’s work lives are enriched greatly when they feel they are making progress on work that is meaningful. When organizations give people a sense of meaning, it helps to build a healthy organization that is competitive and effective. Numerous studies have demonstrated that by giving people meaning and ownership of their work, they are more committed to doing it, more personally motivated, and more engaged. More than half of entrepreneurs are driven to start a company so that they can be their own boss or build something successfully from the ground up —and only 8 percent of small business owners see money as the main motivation.

If you want to improve employee engagement, the answer lies in truly dedicating the time to understand what employees really value, and recognizing your staff as contributing members of a winning team. People are driven to work harder when they can align with the company’s mission, and when their manager shows appreciation for their work. So take every opportunity to celebrate successes, even the small wins. As a manager, build a personal connection and trusting relationship with your employees. Specific praise and recognition go a long way in helping people know what they are doing to contribute to the success of the company, whether it’s a gift certificate for the completion of a stressful project, a shout-out at a company meeting, or a celebratory team dinner.

People also become disengaged when they feel that there are limited opportunities to advance their careers. It’s important to understand what tasks your employees are working on ( without micromanaging them) to help find ways for them to grow as professionals. If someone’s day is filled with mundane tasks, are there ways to better automate admin-heavy processes so they can focus on more critical and creative activities? On the other hand, is the person overwhelmed with too many to-do items each day, and do they need additional resources to help them balance their workload? At Replicon, we work with organizations around the world by providing the tools to empower employees to take control of their time, give them full visibility into workloads, and adjust team resources as needed on projects. This greater level of granularity and transparency helps businesses better manage and engage their workforce. Apart from these daily tasks, this recent paradigm shift of remote work culture is also accountable for employee disengagement, thanks to the daily virtual meetings. From the Forbes report, many employees feel burnout due to tedious virtual meet-ups. 38% of the respondents admit they feel tired after the numerous meetings, while 30% report it causes stress. Too frequent meetings not only obstruct the workflow, and productivity, but also leads to stress, burnout, and employee disengagement.

Finally, a successful business also knows that work is not all about being on the job. Employees who use most of all of their vacation time each year perform better, are more productive, and more satisfied at work than their workaholic counterparts. While the U.S. is the only developed nation not to guarantee some sort of paid vacation time, taking time off is essential to a person’s well-being in the workplace. Keep track of the vacation time being taken by your employees, and actively encourage people to go on vacation when their accrued balances are running high, or if there is a lull between projects.

While financial incentives are good, the more effective employee engagement initiatives are based on specific motivators from the employer. A company with a culture that fosters an environment of risk taking, openness, and engagement will be rewarded with more motivated employees, greater workforce efficiencies, and be better primed for business growth.