Does Money Motivate?

by Andrea Watkins - Date: 2010-11-11 - Word Count: 706 Share This!

Some say money can't buy happiness, but data shows that for those who can barely pay the monthly bills, it certainly can-at least in terms of happiness on the job.

According to the Bureau of Labor Statistics (BLS), in 2006 the U.S. poverty level was $20,444 for a household of four, and the average two-adult household, with at least one child under six, spends $63,412. (The only categories with expenses less than $40,000 a year are those with only one adult.) As a reference point, a full-time worker making $9.00 an hour brings home approximately $15,000 a year after taxes. The current U.S. minimum wage is $5.85 an hour.

For production, warehouse or clerical workers making less than $40,000 a year, income is positively related to employee engagement and their intention to stay with the organization. While the relationship is modest, it is indeed significant. However, as income rises for professional and technical workers and management, the relationship diminishes. In other words, income matters more to those making less, and for those in management, no relationship exists. While for production, warehouse and clerical workers, income and intention to stay are modestly related, a belief in opportunities for career advancement is highly related to deciding to stay with an organization. Whether in management, professional, clerical or production jobs, if individuals can see a future for themselves at the company, they are more likely to stay.

These findings are not surprising. However, consider the amount of money spent on retention and performance bonuses, golden parachutes and salary increases for the very group who consider money as noticeably less relevant when deciding to leave a job. Granted, individual circumstances may vary, but in general, offering larger raises and bonuses to higher income groups is unlikely to raise this group's retention rates.

This finding makes sense when thinking about worker motivation theory. For years now, theorists and academicians have considered pay a "hygiene factor" in employee motivation, a term referencing Hertzberg's two factor theory of motivation, published in his 1959 book, "Motivation to Work." According to the two-factor theory, hygiene factors do not add to motivation, they can only negatively affect satisfaction if they do not reach a certain threshold. In the case of line workers' income, it is likely that this threshold is the point at which the individual is living comfortably. Higher paid employees may set the threshold at a higher cost of living, or perceptions of fairness as they compare themselves to their peers. Regardless of income level, after income reaches this threshold, it can only serve as a de-motivator; if income is taken away or perceived as unfair, employees will tip the scale by underperforming, which manifests in behaviors such as not meeting goals, taking more sick days or leaving the job.

For many industries, it is the lower skilled, lower paid workers who are the bread and butter of the company's well-being and indeed make up t huge chunk of a company's HR outsourcing. In 2007, 33.8 percent of clerical, service, warehouse and production workers were thinking about leaving their job in the next year, with another 22.2 percent on the fence; over half of this workforce is not committed to staying. Common sense tells us that it costs money to train employees.

Higher turnover in our core production and service centers-in the largest segment of workers-can cost an organization hundreds of thousands of dollars. Losing line workers in volume is an expensive proposition.

Just because a worker is more skilled or educated does not mean he or she is more valuable to the organization's bottom line. Although it may take less time to train line workers, there is training time nonetheless, and rookie mistakes from the frontlines of an organization take a big toll on : customer satisfaction. In the end money isn't the be all and end all in : hr management. Engage your workers through employee surveys and 360 degree feedback.

Let's consider turning this problem on its head. Rather than using money as an incentive to stay for those who aren't motivated by such an incentive, perhaps it is more fiscally responsible to invest in what it takes to raise retention rates of core process workers; and in so doing, maintain quality and service standards.

Andrea Watkins writes articles for Kenexa, an industry leader in comprehensive and cost-effective hr management solutions. hr outsourcing and employee surveys not only let you retain good candidates, they also improve your workforce and grow your company.n
n Your Article Search Directory : Find in Articles

© The article above is copyrighted by it's author. You're allowed to distribute this work according to the Creative Commons Attribution-NoDerivs license.

Recent articles in this category:

Most viewed articles in this category: