The Role of Money in Employee Motivation: A Comprehensive Analysis

This report delves into the extent to which money serves as a motivator for employees, examining the concept of compensation and its influence on employee behavior. It discusses how financial incentives, such as bonuses and rewards, can boost motivation and enhance performance. The report highlights the importance of recognition alongside monetary rewards, emphasizing the need for transparent and fair reward systems to avoid demotivation. It explores the 'carrot and stick' approach, advocating for a balance between rewarding good performance and addressing poor performance to foster a healthy work environment. The report references the impact of compensation on employee decisions to switch companies, and stresses the importance of a comprehensive approach to employee motivation, including the use of financial and non-financial strategies.

To what extent is money a motivator for employees?
In corporate language, we use the term “compensation” for money. Each
employee is pulled up to a company through this, as it is one of the basic
necessities to have good standard of living. Money these days has been a
great motivator for employees. But as the saying says, it doesn’t how much
you have, what matter is to understand the value of it. In a corporate
environment, perks and benefits in form of cash or bonus is provided.
Voluntary works leading to extra compensation drive employees to work
harder and more in a smarter way. Employee always sees for recognition in
the firm, there could be ways to do that. One simple way is through working
harder and smarter and getting rewarded to it – reward if linked to cash
incentives would augment and boost motivation, making employee more
attuned towards work. Second way could be recognition – each blue-collar
worker wants to be appreciated and praised for the contribution he is doing
towards the organization. Organizations across the globe adopt different ways
to motivate employees. To cite an example, Merlin – one of the top-notch
entertainment company gives recognition to people who ‘go the extra mile”.
Instant cash awards and certificates are distributed to each. Implementing
this, they noticed that employees strive to work hard and a sense of earning
recognition and “go the extra mile” is there (White, 2015). This ultimately
enhanced and augmented the productivity of organization. Each person works
to have the basic standard of living and money serves its purpose. So, this is
but obvious employees will tend to lean towards money giving boost to their
motivation. Hops between companies are majorly because of money or
compensation being offered more in the new company. But, this motivator has
its demerits too – if someone is praised or appreciated or rewarded with cash
incentives, the other employee receiving less will in a course of time, feel
demotivated (Armstrong, 2002). Creative and innovative strategies should
be adopted by organizations to make money as the motivator. Concerning
this, organization should adopt “carrot and the stick” theory. To lure
employees, carrot should be shown but at the same time stick should also be
there so as to know that trust by the organization towards employees has to
be carried ahead in long run. The poor performance has its drawback, this

should be well communicated to each employee. If it escalates motivation for
employees, to some it decreases as well. So, a job well done will be
appreciated through rewards and recognition but at the same time the one
performing low, will have to charge up. In consideration to this, the
management should adopt transparent reward and recognition policy (Lavoie,
2016). This will aid in having less grievances and the work culture will be
healthy too. Since the employees are the strongest pillars of any organization,
they need to be fully motivated and only motivation in today’s era is money.
Lavoie, A. 2016. This is why you need to talk money with your employees.
[Online]. Available at: < https://www.entrepreneur.com/article/280786>.
[Accessed on October 20, 2016].
White, D. 2015. Money is nice, but its not enough to motivate employees.
[Online]. Available at: < https://www.entrepreneur.com/article/247333>.
[Accessed on October 20, 2016].
Armstrong, M., 2002. Employee reward. CIPD Publishing.