A Plug for Cash

It is now generally accepted that past a certain point, more money does not inspire more motivation or engagement.

This idea fits nicely with the stingy conservative workforce spending policies adopted by most companies over the last year or so and has also paved the way for some fascinating discussions around non-monetary incentives here at the Cafe.

Nonetheless, I was intrigued when I came across a LinkedIn survey recently asking people what motivates them the most.  

As expected, money did not rank at the top of the list but you can see it’s still pretty important.  The survey also included optional comments from respondees and it was pretty clear that a number of people who responded to the survey are distressed for cash. 

For various reasons, according to this particular poll money mattered more to about 15% of the people who responded than other motivators. 

So here's a question: Do you know which people would choose money over other motivators in your organization?  It's worth a ponder because these people are especially vulnerable to offers of a higher salary, even if you’re doing everything else right. 

This means that although exploring non-monetary motivational strategies such as recognition, career development, etc., are important for companies that wish to be high performing, good old fashioned salary analysis still matters.

What has changed for compensation professionals is the need to have a better understanding of the workforce than the traditional cookie cutter salary survey approach required.  For example, you might want to correlate people who place the highest value on salary with actual salary and critical organizational skills.

The takeaway is that until we can say with confidence that we’ve reached that ‘certain point’ beyond which money no longer motivates, non-monetary incentives may not inspire that motivational je ne sais quoi we're looking for.

Now, having made a plug for cash, a few words to the wise:

• Don’t assume you know what value individuals place on specific rewards -  If you do, you'll end up wasting good money on benefits the recipients don’t care about.  Why not let people pick their own rewards within prescribed total compensation limits?

• Calculate what can be calculated – Any reward that can be monetized should be calculated and compared across the organization to ensure people are receiving appropriate total compensation for their contributions.

• Communicate – Don't forget to show people the value of what they’re getting AND what it costs the company to give it to them.  It's so easy to build a pretty report these days.

• Don’t confuse the motivational power of monetary and non-monetary benefits – Just because Bob needs cash doesn’t mean he doesn’t care about career development. And while Jane may accept less money in exchange for a great career opportunity, over the long run you'll probably lose her if you don't pony up. 

And now for something completely different:

Picture courtesy of LinkedIn.com.

Laura Schroeder is a Compensation Strategist at Workday, headquartered in Pleasanton, CA.  She has nearly fifteen years of experience designing, developing, implementing and evangelizing global Human Capital Management (HCM) solutions and holds a certificate in Strategic Human Resources Practices from Cornell University.  Her articles and interviews on HCM topics have been published in the US, Europe and Asia.  She lives in Munich, Germany and enjoys cooking, reading, writing, kick boxing and spending time with friends and family. If you want to read more from Laura, check out her talent management blog Working Girl or follow her on Twitter @WorkGal.

Comments

[Drew Hawkins]

Money will always be a motivator. It's important to have a nice balance between noncash and normal compensation. Employee points won't pay the bills.

[E James (Jim) Brennan]

Drew's right in general but Herzberg clarified that LACK of money creates dissatisfaction. When you can't pay the bills, money becomes all-important; when you have a tidy nest egg of savings, money is no longer a top priority. Cash is a hygiene factor rather than a motivational factor.

Laura hit solidly on the vital point that all motivations are personal and thus individual, variable and occasionally unique; so no one reward or reinforcement method is a universal panacea. The most effective supervisors are those who understand what motivates each of their subordinates. Only thus can you make optimum use of the various incentive tools at hand.

[Laura Schroeder]

Thank you so much for your comments Drew and Jim. I agree with the the phrase 'cash is hygiene factor' and would only add that until salary reaches the 'hygienic' level for a particular employee, non-cash incentives may fail to motivate. As you both pointed out, finding the right balance is important.

[Joe Blattner]

All good points, Laura. I think that before you can begin to know what value each employee places on which benefit/perk, as an employer, you must know yourself all the added benefits your company supplies it's employees. Too often, this information goes unreported or is overlooked. Communication by using total reward statements is one way to take that first step.