Motivation and Money
What can arnold schwarzenegger teach us about money and motivation
See the slide presentation here:
This Module is Part of Boss Camp
Boss Camp will show you how to improve employee performance by showing you what they never taught you in school. The program includes topics such as:
- How to motivate employees
- What are bad employee motivators
- What you must do as a manager but isn't on your job description
- How leaders get power
- Management techniques that don't take time
Get the full video transcript here...
What can Arnold Schwarzenegger teach us about motivation and money
How do you motivate employees? Is money a good or bad employee motivator?
The importance of motivation:
A motivated workforce can do anything. Because people are incredibly resourceful. If you’re the boss you need a better way to motivate your employees. And I will share with you what is even more powerful than money.
I don’t often say this but let’s turn to Arnold Schwarzenegger for some words of wisdom. Repeat after me in your best Arnie accent: “Money doesn't make you happy. I now have $50 million but I was just as happy when I had $48 million”.
After you have enough for comfortable lifestyle, money loses motivational power
But what about the people who don’t have $50 million dollars? Actually this is a good insight. Because once you have a comfortable lifestyle then money doesn’t make a big difference to your happiness. Most people aren’t Hollywood stars with private jets and studies show the magic number in the US is an average of about 75 grand in 2015. In other words, another carrot makes little difference to the bunny with the full belly. Some people say they are motivated by money but this is because of status and power, which don’t have to be from money.
There are some other important things you need to know about money and motivation. And this is where money can be a de-motivator.
When money is a de-motivator:
Incentives have a bad history of unintended consequences. Incentivize sales and salespeople work against each other. Or what happens when your staff achieve budget? Right, they stop trying.
What happens when you give someone an unobtainable goal – that’s right, they don’t even try at all. Paying someone less for the same job devalues their contribution and worth.
The problem with incentives
Performance reviews and bonuses are a poor management tool because:
Have you ever had to explain to your employee that they’re not going to get the bonus they expected because the company had a bad year? What do you think that does to their motivation? Bonuses suck when they aren’t in your control and;
How many performance reviews have you been in where remembering what happened all those months ago is a struggle?
Bonuses become a farce because they are paid infrequently,
They are subjective and
It’s a reward for past behavior, not encouraging future performance
In general how painful, time consuming and downright stressful is the performance review process?
But this is useful because these problems tell us what a good motivational scheme looks like. Good employee motivation must be:
Simple, fast and objective
Under your direct control because you're responsible for your employees
Forward looking because motivation is about the future and
Frequent because there’s no point in turning the steering wheel when you’ve already gone off the road
And I will be showing you how to do this in Boss Camp.
Coercion vs free will: Intrinsic and extrinsic motivators.
What is Intrinsic motivation? Excuse for me a moment but I’m going to get the dictionary out on you: "Intrinsic motivation occurs when we act without any obvious external rewards. We simply enjoy an activity or see it as an opportunity to explore, learn, and actualize our potentials."
(Coon & Mitterer, 2010)
Doesn’t that sound pretty awesome – wouldn’t you love it if your staff worked because they wanted to not because they had to?
"Extrinsic motivation refers to our tendency to perform activities for known external rewards.” (Brown, Psychology of Motivation, 2007)
Bonuses can actually destroy motivation!
So when you use money to motivate people you move from a relationship to a transaction. Your staff compare what they do with what they get. So bonuses risk destroying intrinsic motivation. So forget the carrot or the stick argument – because that’s totally missing the point. And bonuses can reduce motivation,
“A good manager doesn’t need to bribe or coerce their staff to get them to do what they should do anyway.”
Authority only promotes compliance
Another bad extrinsic motivator is using authority because that just promotes compliance. Please refer to the section on the role of personal power vs authority.
So what is a good way to motivate employees?
I’m sure you’re all familiar with Maslow’s Hierarchy of needs. But the trick is to relate this to work activities. Once employees have enough money to cover their basics like food, money and shelter, the other motivational factors become stronger. Intrinsic motivational factors that I will show you how to use include:
The desire to grow and learn
The desire to use your skills and do what you’re good at
The desire to do meaningful work, to feel valued and have your contribution acknowledged;
The desire to fit in and have a sense of belonging, including a good relationship with your boss
These map into the management cornerstones because they are so important to the foundations of management.
So to wrap it up:
Money does have a role in employee motivation but it’s more of a hygiene factor. Pay your staff a fair rate but be aware that like Arnold Schwarzenegger says money doesn’t make you happy. Monetary incentives run the risk of undesirable consequences. Your job as a manager is to motivate your staff and intrinsic motivators are more powerful.