Organizational Behaviour: The Role of Money and Rewards in Motivation

This essay delves into the contentious relationship between money, financial rewards, and employee motivation within organizational behavior. It examines the debate around whether money truly motivates employees or if other factors are more critical. The essay explores both the pros and cons of using financial incentives, considering extrinsic and intrinsic motivation, Maslow's hierarchy of needs, and Herzberg's two-factor theory. It discusses the role of salary, bonuses, and other financial rewards in employee engagement, goal setting, and overall productivity, while also addressing potential downsides such as reduced creativity, unethical behavior, and short-term thinking. Furthermore, the essay incorporates theories like Vroom's expectancy theory and McGregor's theory X and Y to analyze the effectiveness of money as a motivator, ultimately concluding that while financial rewards have a place, they should not be the sole focus of motivation strategies. The essay emphasizes the importance of balancing extrinsic rewards with intrinsic motivators and fostering a positive work environment to enhance employee-employer relationships.

Running Head: ORGANIZATIONAL BEHAVIOUR
Topic- Money and other financial rewards are a fundamental part of the employment relationship
and can be used effectively in motivating employees. Discussion of pros and cons of this
argument.
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Author notes

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“You cannot have a million-dollar dream with a minimum-wage work ethics”- Stephen C.
Hogan
Money is motivation or motivation is money- this paradigm is still unresolved.
Motivation is one of the key attributes of organizational behaviour where well-motivated
employees define the good organizational culture at large. So, what actually is motivation? Well,
in this regard Delaney (2017) and Royal (2017) has defined motivation as the reason that defines
the actions of the people and their willingness for accomplishing goals. It is derived from the
word motive which means satisfaction needs. In the context of work goals, the psychological
factor that stimulates the employee’s behaviour is basically the desire for having money.
According to Gerhart (2015) and Fang (2015) motivation in regard to organizational prospect
can be either intrinsic or extrinsic. Intrinsic motivation is mainly personal motivation from
within. It involves behavioural engagement resulting from personal rewarding. Intrinsic
motivations can be based on autonomy, higher locus of control, self-efficacy beliefs and
employee growth-need strengths. Guillén, Ferrero and Hoffman (2015) mentioned the Job
Characteristics Model which focuses on the use of job design for motivating employees
intrinsically, generally based on skill variety, task identity, task significance, autonomy and task
feedback. On the other hand, extrinsic motivation is the behaviour driven by external rewards
like money, grades, fame, and praise. The origin of such motivation is outside the individual and
is the opposite of intrinsic motivation based on personal needs. In simpler terms, it is a reward-
driven motivation based on operant conditioning. Hennessey, et al. (2015) mentioned that
external motivation can be either tangible (money and rewards) or intangible (fame and praise).
Both reward and punishment act as influencing factors of extrinsic motivation. In consideration
of employee-employer relationship there are four basic elements namely selection and employee

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engagement, salary and wage payment, power of dismissal and power of control and conduct
Kroll and Porumbescu (2018). In this essay the influence of money and other financial rewards
in employment relationship and employee motivation will be discussed along with the various
pros and cons.
First the pros of money and other financial rewards as a form of tangible extrinsic
motivation in workplace is discussed here. Extrinsic motivation is generally used by managers
for galvanizing employees in achieving any work objective Kuvaas, Buch and Dysvik (2018).
Therefore, extrinsic motivation like rewards and bonuses help the organization in accomplishing
their targeted goals in due time. Money is such an important weapon of motivation that can drive
a person to perform a task even if in reality the person is not actually interested in accomplishing
it Law, Chan and Ozer (2017). It helps in easy goal setting and thereby increase employee
survival in the long run. Globalization has increased business competition manifold; in these
circumstances the world has become more artificial and self-oriented. Money has gained its
importance manifold in workplace motivation and present-day jobs are mostly money-centric
instead of people-centric Lee and Raschke (2016). In this context Maslow’s need hierarchy can
be used to explain the importance of financial rewards and money in employee motivation. There
are five basic hierarchical needs namely physiological needs, safety needs, security needs,
esteem needs and self-actualization needs Malik, Butt and Choi (2015). Safety needs emphasis
the need of financial security where money plays important role. Salary and wage payment at
times defines professionalism. That is, in professional contexts of workplaces money
distinguishes it from non-professional contexts. And it is quite obvious that if an employee is not
paid then he/she will not be motivated to work and will look for a job change. A health
employment relationship increased satisfaction level of employees and thereby increases overall

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productivity of an organization Manganelli, et al. (2018). And motivation plays an important role
in supporting good employment relationships. A token of appreciation in this regard like cash
prize, bonus, incentives, shopping coupons, gift vouchers and other financial rewards will
catalyze the performance of the employee and as a result both satisfaction and performance will
increase manifold. And there will be no issue of conflict of interest or other unwanted situations.
The whole organizational work culture will improve and team work cohesion will also improve
considerably Singh (2016). It is quite evident that when employees are provided rewards and
recognition their self-esteem increases and their chances of staying in the organization increases.
Reduced employee turnover directly improves the sustainability of the organization.
However, it is also true that the moment money becomes the only motivating factor self-
passion and internal will stimulation of performing a job reduces considerably. Ethical dilemma
increases and a more mechanistic approach of the employee is visible in their work fronts Singh
(2016). Money makes a person self-centered and as a result overall term performance in an
organization will get negatively affected. To be more specific, money can extinguish inner
motivation, crush creativity, diminish performance, foster short-term thinking, encourage
unethical behaviour and can become addictive Yoon, et al. (2015). In this case, Hertzberg’s two
factor theory of motivation-hygiene discusses the role of financial rewards and monetary benefits
workplaces. Here intrinsic motivators of recognition, personal growth and achievement are good
for employee motivation. Whereas, hygienic factors like salary, fringe benefits, good pay,
insurance and other financial rewards are included under non-motivational factors which do not
give positive satisfaction. According to Singh (2016, pp.199-201) these maintenance factors are
often referred to as KITA, the acronym for ‘kick in the ass’. According to Hertzberg, these
hygiene factors are the causes of dissatisfaction among employees and in order to remove

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dissatisfaction at workplace these factors of hygiene must be eliminated. Money should
definitely be a motivation but if should not be the only motivator for work. The need for money
reduces the empathetic nature of the employees and employment relationships become more
artificial where increased professionalism hinders overall organizational productivity
Manganelli, et al. (2018). Also, when the reward is exhausted or the money is gone employees
become highly demotivated and their dependency on such rewards increases manifold. Mc
Gregor’s theory X is apt for discussing the extrinsic needs and wants of employees. The theory X
is grounded on the belief that employees are lazy to perform their job and need extrinsic
motivation like monetary compensation to make them perform their job. Organizations should
try to avoid such theory X type employees and imbibe theory Y type employees who are self-
motivated to perform their own jobs Lee and Raschke (2016). Rewards affect motivation greatly
and result in inconsistent outcomes and conflicts. Moreover, work-life balance is also affected
greatly due to increased dependence on extrinsic motivators of work. The instrumentality factor
of Vroom’s expectancy theory also emphasis the relationship of strong performance and rewards.
The element of Valance also emphasis on attractiveness of extrinsic rewards, incentives and
potential outcomes. Vroom’s theory is based on the principle that people will work hard when
they understand that the outcomes are linked to rewards and monetary benefits.
Thus, to conclude, it could be said that money should be an element of motivation but
should not be the only factor deciding upon motivation. Focus on self-motivation and intrinsic
factors of motivation should be prioritised. Lee (2016) and Raschke (2016) both mentioned that
empathy plays an important role in building employee employer relationship and it should not be
lowered by use of extensive extrinsic motivators. Focus on team performance and employee
participation in groups should be emphasized to develop better employee-employer relationships.

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After evaluating both pros and cons of money and financial rewards as a form of extrinsic
motivation it can be opined that the degree of effectiveness of extrinsic rewards should be
limited by organizations and the locus of control should be in the hands of the organization
Malik, Butt and Choi (2015). Every organization should learn that dependence on increased
extrinsic form of motivators is fatal for their future suitability and therefore should be used
economically. Gerhart (2015) and Fang (2015) opined that best organizations are those that
effectively use both intrinsic and extrinsic forms of motivation in the right proportion and in the
right time. Being paid for a job is fair enough, but it should not be the influencer of employee
goal accomplishment self-esteem need fulfilment of employees at large.
Organizational culture is constantly changing and so are work dynamics. Today’s
business world is focusing values more in comparison to monetary rewards. According to Law,
Chan and Ozer (2017) benefits of value-based motivators are more worthy for millennial
employees. Though, at times, extrinsic motivation is best for situations where reward is used
sparingly enough such that its impact is not lost. The over-justification effect should be wisely
handled which otherwise the value of rewards will lose its weightage if it is given too much.
Although, there are some reward-based tasks which when performed with extrinsic motivator
support have higher productivity compared to the same non-reward task. In order to reduce work
stress and job monotony other forms of motivation like job rotation, job enrichment, job
enlargement or in cases job rotation should be encouraged. Promotion can also be a good
alternative for motivation. Thus, to have a good employment relationship in organizations focus
should be given more on motivation and not only on extrinsic motivation of monetary benefits
and rewards.

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References
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