Motivating with money

Over the years, I’ve come across many seminars, webinars, books and other presentations about motivating employees without money—a relevant topic and appropriate for any business. I’ve even incorporated some of these techniques at my shop because a company cannot continuously throw money at employees in an attempt to keep them happy and productive. There are times, however, when motivating with money can be the ultimate inspiration and, if managed properly, can literally generate the best bang for the buck. 

Money as a motivational tool can take the form of an employee’s pay rate, commissions, bonuses and, perhaps once a certain level of seniority is reached, paid health insurance premiums. Not only do employees like it, but it’s often a simpler solution. Adding a few bucks to a paycheck is a lot faster and easier than establishing many other incentives. 

Of course, increasing compensation usually means greater productivity and higher expectations. I’m not big on increasing pay just for time served, especially when a skill set hasn’t improved. If an employee is performing at the same level for 2 or 3 years and shows no initiative, money probably isn’t the answer. For most, though, additional compensation generates more enthusiasm and a higher level of motivation than a company shirt, award or the occasional day off.

The most effective way to use this technique is to compile a list of employees’ accomplishments and the expectations that would justify additional compensation. When they see you’ve taken the time to put these expectations in writing, it has more impact than a conversation. This could be called “an evaluation,” and employees normally assume an evaluation means a pay increase. 

While it’s common to reward employees at evaluation time, it’s not guaranteed. Employees that are not improving may not deserve additional compensation. Also, monetary rewards may be justified at any time throughout the year for outstanding work, not just during annual evaluations. Employees must understand they’re expected to meet your standards all year long, not just at evaluation or bonus time. When they know you’re willing to monetarily reward them throughout the year for excellent performance, they tend to maintain their enthusiasm and, hopefully, take on more responsibility and improve their skills along the way.

Earlier in the year, a couple of my employees deserved to be rewarded for going above and beyond. I thought about a $500 or $1,000 bonus, but decided to just increase their pay $1 per hour. This equated to about $200 more per month. The bonus certainly would’ve been appreciated, but the bump in pay went farther. It meant more to them and I viewed it as a bargain considering their efforts saved the company a few thousand dollars a month. 

I’ve also had an experience where motivating with money didn’t work. We acquired an experienced lathe machinist through an industrial staffing company and his trial period went well. He was a bit older than most new hires, but his background and experience level seemed to be a good fit. 

Unfortunately, things began to change once we permanently hired him. I began hearing about his disruptive personality and negative comments to co-workers, including complaints about his pay, computer, end-of-year bonus and even his company shirts. It became apparent that regardless of what we provided, it wasn’t going to be enough. He became a distraction and we ended the relationship.

Motivating with money won’t work with everyone, but it usually has a mutually positive impact when deserved. Have a prosperous February!