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Why Money Isn’t A Great Employee Motivation Strategy


I had an interesting conversation with another HR professional recently discussing employee motivation and retention strategies.

Too many businesses fail to hit the mark when implementing effective, successful retention and motivation strategies.  We both reflected on our experiences and agreed that money is often a significant factor.

It can be difficult to get the remuneration balance right in a company: too little will leave employees dissatisfied, but too much can be equally detrimental.

Motivation theorist Fredrick Hertzberg believes workplaces are made up of two factors – hygiene and motivators.

Motivation is not about money

Hygiene factors include safe working conditions and money. While inadequate or unfair hygiene factors can be dissatisfying, they are unlikely to have much of an effect on retention and motivation.

That’s right, I just said that money (and I mean base salary, performance bonuses etc) is unlikely to have an effect on retention and motivation.

Actually, I’m going to go a step further and say that paying inflated salaries and bonuses (outside market rates) is actually detrimental to your business.

I’m not crazy. There is a lot of evidence to support this, and there is a fantastic video about this topic titled – The Surprising Truth About What Motivates Us on our LinkedIn discussion.

What are YOUR retention strategies?

If the only retention and motivation strategies your business employs are monetary, your business could be in big trouble.

Pay your employees too well and they will probably stay with you for a long time.  This is a good thing, right?

Have you heard of ‘golden handcuffs’? Employees who could not find a job paying the same, or similar in the marketplace often report feeling ‘chained’ to their employer. They are used to earning a certain amount of money and often can’t afford to go backwards in their salary due to their own financial commitments.

Employees can become extremely resentful when they feel trapped in a job.

Unhappiness at work can manifest itself in a variety of ways, but frequently includes an increase in absenteeism and reduced work quality. At the extreme, it can severely impact workplace culture and morale, and lead to employee fraud and theft.

Another phenomenon that I encounter frequently in organisations is related to performance bonuses. Typically, these are structured as a percentage of an employee’s base salary and determined through both individual and company performance.

I have found that a majority of staff tend to see these bonuses as an entitlement. If the company does not pay the full amount, there is an attitude that they have been cheated out of money they should have received.

The key is to execute non-monetary motivation and retention strategies to augment your remuneration policy and other ‘hygiene’ factors.

Stay tuned for my next blog which will discuss effective non-monetary strategies to motivate your staff.

Kate Klease is an executive at Vantage Human Capital, a specialist recruitment and human resources consulting firm that helps ensure clients have appropriate strategies in place to successfully retain, motivate and manage their people.

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