1. Do Your Employees Want Extra Pay or
Extra Praise?
People like to toss money at problems. Leaders, managers and employers are no exceptions. A method to
motivate employees and bring out their full productivity potential is needed. Till today, businesses rely
heavily on money to get things rolling, but are these strategies effective?
Are Monetary Incentives Effective?
Eh, Sort of
To a certain extent, money can motivate people. This is especially true for low pay and low skill jobs.
Money becomes an objective for certain individuals, motivating them to work harder in these instances.

2. Mechanical jobs which require little interest in them are best when incentivized through cash. These jobs
are repetitive in nature and require little thinking. Given that, a less complex incentive will do the trick.
When comparing which incentive is the most convenient, money wins out without fail. It requires little
thought on the part of an employer and little investment of time. As long as cash is in hand, an incentive
exists. This is one reason why employers tend to gravitate towards cash incentives –they are easy, fast and
effortless to provide. In comparison to indirect or intrinsic forms of motivation, monetary incentives do
not need much skill on the side of the employer in order to be used.
But there are Problems
According to Maslow’s Hierarchy of Needs, once an individual has enough cash to sustain their basic
needs, they will strive to achieve emotional and personal needs. Money can satiate a workers desire only if
their basic ability to sustain themselves are lacking. Given that most modern workplaces deal with white
collar workers, money as a motivational approach is ineffective for leaders to use. Instead, followers and
employees yearn for higher order needs –as Dan Pink puts it: mastery, autonomy and purpose. Money
cannot facilitate these desires.
Another problem exists: money destroys creative thought. The nature of the modern workplace is one that
demands a worker to think beyond black and white. Money as a source of motivation is awful in achieving
this. Rather than feel a connection to their job, as thus strive to be good at it, employees build a
connection with the money you offer. Their performance is restricted by their own minds, where they only
appreciate the cash and not the overarching purpose of their job.
Studies by economist Dan Ariely have shown that money narrows down thinking. This is useful when the
task is repetitive as it facilitates concentration. However, the modern workplace rarely is in need of
narrow thinking. Tasks often require some degree of critical thinking, not mere mindless concentration on
detail. In this case, a monetary incentive may be unsuitable.
The Big Picture

3. Convenient it may be, but don’t consider it your silver bullet as a leader. Identifying the need for a
monetary incentive is far more important than the actual incentive. Use it sparingly; acknowledging that
at times, money may actually work against your desires as a leader.