Weak Leaders Use Money as a Motivator

“Managers tend to use compensation as a crutch. After all, it is far easier to design an incentive system that will do management’s work than it is to articulate a direction persuasively, develop agreement about goals and problems, and confront difficulties when they arise.”
— Michael Beer, Professor, Harvard University, researcher, and author on organizational change

Decades of research and dozens of studies show again and again that while money can be a de-motivator, it is rarely a good motivator. Money always shows up as fourth or fifth on any list of motivational factors. Pay gets people to show up for work. But it doesn’t get people to excel. More important is interesting, challenging, or meaningful work, recognition and appreciation, a sense of accomplishment, growth opportunities and the like.

The big problem is that managers have consistently listed money as the number one factor that they think motivates people. So they keep fiddling with pay, bonuses, and financial incentives in a futile attempt to find the elusive combination that will motivate people to higher performance.

Bribing people to perform turns them into mercenaries. It debases, degrades, and demeans work. It sets a vicious, self-perpetuating cycle into motion — incentives, inducements, rewards, and the like, leave people feeling manipulated and overly focused on what they get for complying with management’s goals and direction (tuned only to WIFM — “what’s in it for me”). The emptier work is, the more people look elsewhere for fulfillment; so we demand more money and incentives to continue working in meaningless, unfulfilling jobs (which then “proves” to managers that people will not improve their performance unless they’re bribed to do so). Money is rarely an effective rallying point for high performance. That’s because money does not provide deeper meaning and inspiration for a larger cause and purpose.

At the Clemmer Group, we are big believers in paying people very well. We agree with the person who said, “If you pay peanuts, you get monkeys.” We have long believed in, and practiced, profit sharing and organization or team performance bonuses. The people who helped create the profits should share in the rewards in proportion to their contribution (which can be very tough to establish).

But more important than the money are the messages profit and performance bonuses can send. They should make people feel like partners, not puppets on a string. That means rewards should follow, not lead high performance. It also means that education and communications, measurement and feedback, as well as skill development, must be tightly melded to any reward and recognition programs.

Using rewards and recognition

A high-performing organization is filled with higher performers who are well-paid. And we should pay people well. Once we are sure employees feel their compensation is fair and equitable, don’t even mention money again until next year. Fix everyone’s attention on the bigger and more meaningful issues of context and focus (vision, values, and purpose), customers and partners, innovation, goals and priorities, and growth and improvement. Concentrate on building a culture of success and forward momentum with lots of recognition and appreciation for everyone’s contributions.

By: Jim Clemmer

For over 30 years, Jim Clemmer’s practical leadership approaches have been inspiring action and achieving results. He has delivered thousands of keynote presentations, workshops, and management team retreats to hundreds of organizations around the globe moving his audiences from inspiration to application. He is listed in the World’s Top 30 Most Influential Leadership Gurus based on research with 22,000 global business people, consultants, academics and MBAs.