Financial rewards, motivation and profit.

financial reward as a motivator

Can we use financial rewards to motivate people in organisations?

Money is clearly a motivator in the world but does it lead to increase profit?

Certainly basic economic theory and practice in organisations would lead you to believe this is the case.

If you don’t pay people enough they won’t be motivated……but can you increase motivation by paying more?

An Academic study at MIT followed up by a wider study found the following:

* Basic mechanical skills – increased financial reward leads to better performance (if – then rewards)

* Once you get above rudimentary cognitive skill, where it requires conceptual creative thinking are required and financial rewards don’t matter
A larger rewards led to poorer performance

This super video by RSA (Royal Society for the encouragement of Arts, Manufactures, and Commerce) takes a brilliant easy to watch look at what motivates workers to work the link to profit and how to take advantage of that as a business. The message clear and the animation is excellent.


Conclusions on financial rewards and profit

Pay people enough to take the issue of money off the table.

Reward people in business through:

Autonomy – allow self direction, management of own work.
Mastery – the ability to improve and get better at things to achieve personal satisfaction.
Purpose – give people a transcendental purpose. “When profit motive gets unhinged from the purpose motive – bad things happen”.

In other words treat people like people not machines.

This is a huge topic and there’s obviously a lot more to say and discuss. The aim of the above is to start a discussion and facilitate debate. If you want to discuss further please get in touch.

Stuart Warner, Financial Fluency Ltd