Why Money Doesn't Motivate Employees
While workforce trends, including the Great Resignation and a highly competitive candidate market, are driving salary increases across STEM, employee motivation levels are dwindling.
Despite 62% of leaders shaping their long-term corporate strategy around employee engagement, merely 15% of today’s workforce feels motivated at work. This trend reveals a divide between what employees need to feel motivated at work, and what formal reviews suggest.
Bridging the motivation gap in today’s climate of uncertainty and transformation means looking beyond traditional financial incentives and toward activating meaningful change, to enhance and enable your people’s success.
In this article, I’ll explore:
- 3 reasons why money doesn’t motivate employees
- The power of purpose and belonging
- Alternative ways to motivate employees
3 reasons why money doesn’t motivate employees
Money is an extrinsic motivator
Research shows that internal motivators, where motivation is derived internally (through alignment of feelings, values, or goals), are three times more likely to spur employee engagement than external motivators, where motivation is derived from external rewards (like money).
The research also suggests even at lower salary levels (that still allow for needs to be met), employees were significantly more likely to feel engaged at work when they felt intrinsically motivated, and less likely when they were extrinsically motivated, or motivated by money.
It’s important to note that while financial incentives don’t have to be the focus of your offerings, paying a fair wage is still integral; wider motivation theory suggests that without meeting a fundamental ‘hygiene’ level of financial compensation, internal motivators lose their power. However, placing a greater focus on internal motivators can empower your employees to derive a deeper sense of engagement at work than money alone.
Money doesn’t improve leadership
Managers and other leaders play a critical role when it comes to keeping employees informed, up-to-date and empowered – both through a sense of individual success, and a wider sense of purpose within the organisation.
Recent research from Gallup suggests meaningful communication is key to engagement in the workplace. Gallup found that employees who receive daily feedback from their managers were 3x more likely to be engaged than those who received less regular feedback.
Additionally, 75% of reasons for voluntary turnover can be influenced by managers – demonstrating the potential impact meaningful conversations and action can have in the workplace.
Without meaningful communication in leadership to activate real changes to work environments, financial incentives are unlikely to enable performance or engagement.
Money is not a universal solution
SRG and New Scientist’s 2022 Global Science Employment Report reveals that across the US, Europe and UK, a good work-life balance was the factor cited as most important by the most people working in STEM industries.
However, a good work-life balance was also ranked as the least important factor by the most respondents in the UK and Europe. The results suggest that over half of global respondents would also find an employer appealing if they offered both an attractive salary along with stimulating and challenging work.
Our research demonstrates the variance in priorities for individuals globally across STEM. While money is a partial priority for many respondents, environmental factors that contribute to an individual sense of purpose (intrinsic motivators) like a good work-life balance, as well as challenging and stimulating work, do take precedence.
Taking the time to communicate with your teams and understand what drives them as individuals can help forge a more meaningful work experience that encourages higher levels of motivation, and engagement.
The power of purpose and belonging
70% of employees use their work to define their sense of purpose, and since the pandemic, more people are reconsidering just how aligned their values are with that of their organisation.
This is driving events like the ‘Great Resignation’, where over half of employees left their roles as they didn’t feel a sense of ‘belonging’ at work.
By enabling employees to connect their purpose with the wider organisation, leaders benefit from not only mitigating turnover, but powering greater levels of resilience, belonging, and engagement.
Recent research from McKinsey suggests that during times of change, a strong sense of purpose can help employees navigate uncertainty and exhibit better resilience, and recovery from negative events. Employees who described themselves as “living their purpose” at work, were 4x more likely to be engaged, and 5x more likely to have greater levels of well-being, compared to those who didn’t feel their sense of purpose was aligned with their organisation.
Leaders can start to enable employees to enhance this connection between their individual and organisational purpose by initiating open conversations around purpose, meaning and values, and embracing a mission-led approach.
Need help optimising your talent strategy?
SRG are part of Impellam Group, the UK’s largest staffing business, and the sixth-largest MSP worldwide. Our global presence, extensive talent network and over 30 years of experience in making scientific hires, enable us to meet the unique requirements of every company we work with.
About the author: Initially joining SRG through the strategic sales team, Jacob’s passion for technical search and his experience managing global recruitment means he now heads up Search by SRG, and is Director of both Search by SRG and Client Solutions. Jacob is passionate about partnering with clients to ensure that there is unity. Jacob is still very much hands-on. He recognises the importance of ensuring that the right people are in the right jobs to increase productivity, diversity of thought, and ultimately the success of our clients.
Outside of executive search and client solutions, Jacob can also be heard discussing all things work-related on our Think Bigger Series podcast.
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