Tel: 0345 644 8955 (TPS Registered)

Not All Carrots Are the Same! Money and Motivation

Not All Carrots Are the Same! Money and Motivation

Although many people get excited about pay and pay-related issues (take the public sector strikes about final salary pension in the recent past) research suggests that the link between salary and job satisfaction is generally weak. The results indicated that there is only a 2% overlap between pay and job satisfaction levels and the correlation between pay and pay satisfaction was only slightly higher, suggesting that people’s satisfaction with their salary is mostly independent of their actual salary.

The same is true when looking at group levels. Employees who were earning salaries in the top half of the data range reported similar levels of job satisfaction to those employees earning salaries in the bottom-half of the data range. The findings were based on 1.4 million employees from 192 organisations across 49 industries and 34 countries.

If you want to have an engaged workforce, money is not the answer. Money does not buy engagement.

People perform best when they are personally motivated (for example, lots of variety, satisfying intellectual curiosity, learning new skills) and their carrot is therefore an internal one. Although external rewards like higher salaries and bigger bonuses do work, the impact tends to be short term.

As intrinsic motivation is a better predictor of job performance than extrinsic motivation it is possible that higher financial rewards may limit motivation and job performance. The more people focus on salary, the less they’ll focus on their intrinsic motivation.

If you want to motivate your workforce, you must understand what your employees really value by looking at intrinsic motivators. That will vary for each individual.

Employees’ personalities are better predictors of engagement than their salaries. Personality can determine 40% of the variability in ratings of job satisfaction. The more emotionally stable, extraverted, agreeable or conscientious people are, the more they tend to like their jobs (irrespective of their salaries).

But employees’ personality is not the most important determinant of their engagement levels. The biggest organisational cause of poor engagement is incompetent or bad leadership. It’s said that good employees don’t leave a business but a bad manager. Maybe the facts bear out the saying.

If you have HR queries and problems, get in touch!

Sign up for our free resources and free weekly tip - subscribe here.

Phone 0345 644 8955
LinkedIn Russell HR Consulting


Although every effort has been made to ensure the accuracy of the information contained in this blog, nothing herein should be construed as giving advice and no responsibility will be taken for inaccuracies or errors.

Copyright © 2019 all rights reserved. You may copy or distribute this blog as long as this copyright notice and full information about contacting the author are attached. The author is Kate Russell of Russell HR Consulting Ltd.

Got any HR queries?

Contact us