Ahh, pay day – that wonderful feeling that comes when a direct deposit hits your dwindling checking account. For some, money is why they do what they do, the one and only work motivator. For others, money is secondary to internal fulfillment, a bonus to meaningful work.
Though we like to shy away from the idea of money as a motivator in today’s work world of craft beer fridges and unlimited vacation days, we can’t pretend it means nothing.
Those who value rewards – and yes, there are still plenty of them – work best when compensated with dolla’ dolla’ bills. Promotions, raises, compensation: These traditional modes of motivation produce the best results.
According to the research of two Nobel Prize winners, Angus Deaton and Daniel Kahneman, a person’s emotional well-being – that is, “the emotional quality of an individual’s everyday experience, the frequency and intensity of experiences of joy, stress, sadness, anger, and affection that make one’s life pleasant or unpleasant” – rises along with their level of income.
Think about Dan Price’s decision to raise the minimum salary at his company, Gravity Payments, to $70,000. The jury is still out on whether or not this was a good idea, but you can still learn something from Price: To motivate your money-focused employees, start by setting clearly defined goals attached to monetary outcomes. When the goals are nailed, pay up!
These bonuses don’t have to break your bank. Set a small percentage bonus for big sales, an extra $100 for more responsibility in Q4, or a 1 percent dividend for bringing on a new client.
To Raise or Not to Raise?
To know one’s audience is not only important in giving speeches. When handing out promotions, money isn’t always the best choice.
In a survey conducted by Harris Poll on behalf of Kronos, 40 percent of respondents who received pay raises in the past said the raises boosted their motivation for six months or less, while a further 30 percent said the raises boosted their motivation for a mere month or less.
The takeaway here is that day-to-day acts of gratitude and appreciation in the workplace are much more effective when it comes to employee motivation than pay raises.
As people management expert James Adonis explains, “Money is more of an attractor than a motivator. Which means offering a handsome salary is an enticing way to get a clever candidate interested, but it’s usually only enough to get them through the front door. Once they’re hired, intrinsic motivation is needed if you want them to give you their best.”
As a manager, your job is to know your employees and then tailor their compensation levels according to what will work best for them.
Alternatives to Money
We all appreciate money, but there are also some people who yearn for more appreciation, responsibility, control, flexibility, and other types of “raises.”
According to a survey from FlexJobs, 20 percent of employees would take a 10 percent pay cut in exchange for more flexibility, and 18 percent would be willing to work more hours if they had more control over their schedules. Furthermore, 86 percent of employees say that recognition in the workplace is a major driver of motivation.
To give employees the recognition they crave, you can do something as simple as write a handwritten note. As Kara Simon, general manager of 3Cheers Recognition & Rewards, told CIO, “The time it takes to sit down and write a personalized note says a lot in and of itself. By expressing appreciation in a personal note, the recipient will feel appreciated by the effort and motivated to continue to go above and beyond.”
So maybe we don’t all have to agree about the power of money. What motivates one employee may not work for another. Learn how your employees feel about rewards and motivators, and make use of the ones that deliver the best results.
A version of this article originally appeared on the Vitru blog.