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Why Money Is a Lousy Motivator


by Glenn Shepard
January 30, 2018
Category: Management & Motivation




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Did You Know?

The median household income in the U.S. is $59,039.
Source: U.S. Census Bureau

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Would $250,000 a year interest you?

If you’re like most people, your answer is “YES!”

But what if I told you the job was making and selling Crystal Meth. Would you still be interested?

This job can pay well if you’re good at it. So why not follow in Walter White’s footsteps?

(Walter White was the fictional straight-laced high school chemistry teacher, portrayed by actor Bryan Cranston, who decided to put his chemistry knowledge to work making crystal meth on the TV show “Breaking Bad”).

Answers I get from managers who attend my seminars include:

— It's immoral
— It's dangerous
— It's illegal
— It's unpleasant
— Bad hours
— Poor working conditions
— No future (The average drug dealer is dead or in prison within 6 years)

The bottom line is that money does motivate people, but it's only a secondary motivator (sometimes referred to as a “Tier 2 Motivator” or “Satisfier”).

It will motivate people, but only temporarily. For example, your employees will be very motivated and excited when they get a big, fat raise or bonus. But no matter how much it is, they'll eventually take it for granted and want more. At that point, the bonus or raise will lose its motivational value.

Money does, however, work as a long-term motivator in two ways:

1. Attracting New Employees

If you advertise a position that pays $30 an hour in a market where the average wage is $15 an hour, you'll be flooded with applicants, no matter how tight the labor market is.

2. Reducing Turnover

If you pay a significantly higher-than-average wage, you'll have lower-than-average turnover. People who made $15 an hour at their previous job and are making $30 an hour with you will stay with you.

Not necessarily because they don't want to take a 50% pay cut by leaving, but because they can't. Once their income doubles from $15 to $30 an hour, their spending will also double (or at least increase dramatically). Most people live at or beyond their means, so a 50% pay cut would mean financial disaster. As a result, they end up chained to the job with “Golden Handcuffs”.

This is why we call money a “Bookend Motivator”. It works well on the front end to attract new employees, and on the back end to keep those employees. But it does little to motivate them in between.

To Your Success,


Glenn Shepard

P.S. So what does motivate people? Stay tuned to find out.

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