What motivates people? Experts say it's not money or perks

In an era of large salaries and bonuses, it seems almost counter-intuitive to suggest that non-financial rewards are the greatest motivators of talented people at work. But according to the experts, in most organisations that have a mission, that is exactly right.

“What exactly can you do to create an environment in which people feel their lives are so intimately tied to the business that, as a matter of personal pride, they do everything they can to help it achieve its aspirations and become the best at what it does?” asks Bo Burlingham in Small Giants, Companies That Choose to be Great Instead of Big. He cites three criteria:

“To begin with, you need to get the basics right … That might seem obvious, but you’d be surprised how many companies with wonderful intentions trip themselves up by having poor internal communications, or bad coordination between departments, or inadequate follow-through on decisions, or any of a thousand other fundamental management issues that can negate all the positive initiatives those companies undertake. I have never encountered angrier and more cynical employees than those I’ve met in socially responsible companies that have been so focused on saving the world they neglected to do what was necessary to save themselves.
“The second imperative for creating a culture of intimacy involves reminding people in unexpected ways how much the company cares about them. The crucial word there is ‘unexpected’. these days most companies realize how expensive it can be to replace an employee and how critical it is to retain a good one, and they use a variety of tools to let people know they’re wanted and appreciated — performance bonuses, special benefits or perks, flexible schedules, recognition awards, parties, promotions, and so on. The companies in our sample use all those tools as well, but with a difference. They go out of their way to make sure the message gets through, either by doing what most companies wouldn’t dream of doing or by using one of the standard tools in an unusual way …
“The third imperative concerns an attribute that, at first glance, you might think companies have little control over, namely, collegiality. I’m referring to feelings that employees have toward one another, the mutual trust and respect they feel, they enjoyment they get out of spending time together, their willingness to work through any conflicts that might arise, their collective pride in what they do, and their collective commitment to doing it well.”

“Money may motivate to a degree and for roles that are based on time or piece-work rates,” writes behavioural science expert Bri Williams in SmartCompany.

“But most behavioural research suggests:

Salary doesn’t motivate once you’ve reached a point where basic needs are taken care of (such as food and shelter). Most salaried employees don’t wake up every day excited that today they will earn $x. Its salience recedes in their mind. While you might be thinking ‘I’m paying them for this’, they won’t have the same connection between money and productivity;
Money can actually impair performance in high-incentive cognitive tasks; and
Reminders of money can make staff less collaborative, so if you are emphasising individual bonuses don’t expect a lot of team play.”

“If you need financial incentives to motivate, then you have the wrong people,” writes acclaimed management teacher Jim Collins in Beyond Entrepreneurship 2.0.

“In our research, we found no systematic pattern linking executive compensation to the process of companies going from good to great. Financial incentives don’t — indeed cannot — cause companies to achieve greatness, for the simple reason that you cannot turn the wrong people into the right people with money. After all, if someone needs financial incentives to perform at a high level, he or she lacks the intense inner drive, the productive neurosis, required to do great things.”

“Even at the very top of the U.S. military, multi-star general officers make vastly less than many corporate CEOs — by a factor of five, ten, or even twenty,” explains Collins.

“Whenever I hear corporate board members say, ‘Well, we need to pay tens of millions to get real leadership talent at the top,’ I find myself thinking about general officers who are responsible for thousands of lives and manage huge strategic risks while accomplishing difficult national objectives. If it really is about financial incentives, how do we explain the fact that some of the best leaders in the world serve in our military? Or in our schools? Or at the best medical centres? Or in social movements fueled by the energy of thousands of idealistic young people?

“To be clear, I’m not saying financial incentives lack impact. Indeed, the evidence from economics makes clear: People do respond to incentives (even if they are not the primary source of motivation for the best people). To ignore the influence of incentives is to ignore human nature. And that leads me to a key point: The wrong incentives are not merely benign; they can be outright dangerous. If you’re trying to build a great company guided by a deeply held set of values, you simply cannot afford to have incentives that reinforce behavior incompatible with your core values, or worse, that reinforce the behavior of the wrong people and drive away the right people. Indeed, the wrong incentive system can encourage people to do the wrong things and perhaps even throw a company into crisis.”

“We did a study with sales reps [where] we wanted to look at what are the key differences between the top performers and our low performers,” explains Aperio Consulting Group founder Kerry Goyette in her TED Talk, Stop trying to motivate your employees.

“We assessed them on 35 different traits and we wanted to know out of those 35 different traits, are there any consistencies that we see with the top performers versus the low performers? There were multiple key traits but there was one that was just incredibly significant that pulled out ahead of the rest and that was motivation. And it was the motivation factor on the pain side.”

“So we often think sales reps, they’re so good at ambition, they’re driven by ambition, but on the pain side, we have awareness and we have agility. And these top sales reps, yes they had high ambition but on the pain side, they were just incredibly effective at resolving pain and about problem solving. It gives them that confident mindset; ‘you can throw any kind of problem at me and no problem, I’ll solve it’. So they know that even if they don’t know the answers, they can go find it.”

“It’s a basic axiom that people do better work when they find that work meaningful,” writes Radical Candor author Kim Scott.

“I don’t disagree with this basic premise. However, bosses who take this to mean that it is their job to provide purpose tend to overstep. Insisting that people have passion for their job can place unnecessary pressure on both boss and employee.

“There’s nothing wrong with working hard to earn a paycheck that supports the life you want to lead. That has plenty of meaning. A wise man once told me, ‘Only about 5% of people have a real vocation in life, and they confuse the hell out of the rest of us’. Trying to describe a job in lofty, save-the-world terms is often going to make you look like the ridiculous Hooli chief executive officer Gavin Belson from the HBO television series Silicon Valley. Which brings us back to the main point of this article: Your job is not to provide purpose but instead to get to know each of your direct reports well enough to understand how each one derives meaning from their work.”

‘We work hard not only because we have to or because we are given incentives to do so but, given half a chance and proper conditions, because we want to,” write Elliot Jaques and Stephen Clement in their classic book Executive Leadership: A Practical Guide to Managing Complexity.

“The opportunity for work that stretches one’s capabilities, enabling us to learn and grow, is an aspect of effective managerial leadership that is enormously valued by everyone. Such opportunities release and redirect our natural flow of energy and initiative … according to this view, it is the prime duty of good managerial leadership to provide the conditions that release people’s full and enthusiastic initiative and creativeness into their work … our advice is to put away incentives, bonuses, and other pigeon theory conditioning approaches, and get on with ensuring the conditions for effective managers to recognize good work, encourage it, pay fairly for it, and provide managerial leadership that lets everyone get on with their work.”

“I don’t think you can motivate someone,” says Sadhana Smiles, a leader in Australia’s real estate industry. “I think as a leader you want to build a place where people love coming to work. Once that person is in the business, I can build a culture and an environment that people want to be part of. They feel empowered, they know they are respected, they’re cared for, they’re valued and what you give them, they will find very hard to get anywhere else.

“One of the things I’ve learnt is it’s more than the motivation, it’s the engagement. How do I engage my employees? By building high levels of transparency around the business. People in my business know everything there is to know about the business. I don’t show them all the in-depth data but they do understand the business, the debt levels around it, whether we’re profitable or not. I share with them key numbers and key metrics, every single month. You can’t do one big thing in your business and say, well that’s going to engage people. The engagement process is the constant doing of the little things.”

“I’ve been asked a lot over the years about the best way to nurture ambition — both one’s own and that of the people you manage,” writes former Disney CEO Bob Iger in Ride of a Lifetime.

“As a leader, you should want those around you to be eager to rise up and take on more responsibility, as long as dreaming about the job they want doesn’t distract them from the job they have. You can’t let ambition get too far ahead of opportunity. I’ve seen a lot of people who had their sights set on a particular job or project, but the opportunity to actually get that thing was so slim. Their focus on the small thing in the distance became a problem. They grew impatient with where they were. They didn’t tend enough to the responsibilities they did have, because they were longing so much for something else, and so their ambition became counterproductive.

“It’s important to know how to find the balance — do the job you have well; be patient; look for opportunities to pitch in and expand and grow; and make yourself one of the people, through attitude and energy and focus, that your bosses feel they have to turn to when an opportunity arises. Conversely, if you’re a boss, these are the people to nurture — not the ones who are clamoring for promotions and complaining about not being utilised enough but the ones who are proving themselves to be indispensable day in and day out.”

“When a person is not doing his job, there can only be two reasons for it,” writes Intel found and management thinker Andrew Grove in his highly-regarded High Output Management. “The person either can’t do it or won’t do it: he is either not capable or not motivated. To determine which, we can employ a simple mental test: if the person’s life depended on doing the work, could he do it? If the answer is yes, that person is not motivated; if the answer is no, he is not capable. If my life depended on playing the violin on command, I could not do it. But if I had to run a mile in six minutes, I probably could. Not that I would want to, but if my life depended on it, I probably could.”