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Is Money an Effective Motivator at Work?

You get a job offer from a fortune 500 company, but you just informed the HR manager that you are happy with your five-digit salary in your present job. You lost your chance of owning a duplex flat, a sleek car and a high-flying designation. Are you nuts? Do you find your own behavior a little absurd? No! Your priorities in life are different, that's all. For many executives today, money isn't priority and companies are making note of it.

The link between higher income and happiness is highly exaggerated. In fact, it is mostly an illusion. Economist Alan B Krueger and psychologist Nobel laureate Daniel Kahneman collaborated with three other psychologists on the study (Beteille, Andre, 22). They found that people who were surveyed about their own happiness, and that of others with varying incomes, tended to overstate the impact of income on well-being. Although income is widely assumed to be a good measure of well-being, its role is less significant than believed, and that people with higher incomes do not necessarily spend their time in more enjoyable ways. In fact, if one were to extend the analogy, relatively poorer countries like India seem to have better sense of well being than wealthy Prozac nations like US. Krueger, a labor economist with an interest in psychology, has been suggesting (Chawla Yogesh, 53) that economists add another currency to their measure of a nation's wealth-the coin of life, for how one uses one's time plays an important role in well being. Traditionally, a nation's economic wealth is measured in terms of income and productivity. But if personal wealth does not necessarily lead to personal happiness, then how can GNP reflect a nation's well-being?

"The belief that high income is associated with good mood is wide spread but mostly illusory", the researchers wrote (Saxena, Pramod, 12),
People with above average income are relatively satisfied with their lives but are barely happier than others in moment-to-moment experience, tends to be more tense, and do not spend more time in particularly enjoyable activities.

However, Hewitt's attrition and retention study Asia Pacific2006 revealed the number one reason for attrition is inequity of compensation, with 21 percent of participating organizations saying they had lost employees to organizations offering higher salaries. Limited growth opportunities and role stagnations ranked second and third respectively. The report suggests that organizations are providing the opportunity to teach their employees new skills and provide a favorable work-life balance. And a whopping number of companies are just doing that.

Many other theories given by well known psychologists, managers and academics illuminate different viewpoints when it comes to money as a motivation for work. According to some of these theories, it is the hierarchy of needs that is the major motivation at work. Yet some other suggests (Sharma, Mukul, 37), "Money ain't everything, unless a poor guy ain't got it."

Most of the popular motivation theories can't be generalized but they do provide us with some insight of the phenomena taking place at work in day to day life. The reasons why people behave in a particular way may be objective and can even be subjective as suggested by Max Weber, a well known, sociologist (Limaye, Atul,16). It is indeed something more than just money. Managing the work environment, the perceptions of the people and their expectations is something which is very important if you want the people to get most out from their work.

Posted by: Anastasia T. Ray

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