Does Pay Always Motivate? Debunking Four
Myths about Money

by Dinah Daniels

Imagine introducing 20 fourth graders to the wonders of long division. Some students are still struggling with multiplication and are too overwhelmed to concentrate. Others have been whizzing through their math worksheets and think your lesson is too easy. Several, thankfully, are very engaged. And a few more haven’t eaten and are watching the clock until morning snack.

Although all 20 students need to master long division, the way you spark and hold onto their interest will be highly individualized. Similarly, the best way to keep employees happiest and most productive is to individualize your motivational approach. This means thinking about far more than dangling additional pay as an incentive to stay with an organization.

The belief that money is a one-size-fits-all motivator is a myth. Today’s leaner organizations need to increase the energy, focus and productivity of their people to remain competitive. The solution to this challenge doesn’t lie in dollars. It lies in knowing that the same incentives and job characteristics that make Sally jump through hoops will make Tim want to hibernate from the office. It depends on shedding several erroneous beliefs about the almighty dollar.

Myth #1—Most employees will jump ship for higher pay.

Studies repeatedly show that a myriad of factors contribute to happiness on the job. These include opportunities for achievement, recognition for accomplishments, rewarding relationships with managers and peers, a belief that individual results contribute to a common goal, and encouragement of work-life balance. Employees look at the total picture when making career decisions—and each employee rank orders the factors in different ways. Money is usually low on the totem pole.

A case in point is Mark Bruener, who chose to stay with the Pittsburgh Steelers for the 2003 season even when the team halved his expected salary of approximately $2 million. With a new baby and a just-built home, he wanted to stay rooted for a while. In another case, a talented account manager at a publicly traded company walked away from his job despite successful performance. His position required a degree of extroversion that was unnatural for him. Being in a job that better suited his personality was more important to him than being a guaranteed success.

Myth #2—Pay increases improve productivity.

The greatest guarantor of improved productivity is not regular raises, but placement of people in jobs that fit their talents and personalities like a glove. Consider a Southwestern home building company, which learned the hard way that hiring without delving into personality characteristics can cost dearly. The company sought to penetrate both the entry-level and luxury homebuyer markets, and recruited salespeople for both markets in the same way. The result? Less-than-ideal hires who lost 5-7 home sales apiece before the problem was recognized. The company “self-corrected” by hiring empathetic individuals who enjoyed helping others to work with first-time buyers. It recruited process - and detail-oriented people who enjoyed managing more assertive consumers to sell high-end homes. The more careful job-matching process charged up home sales.

Myth #3—Generous pay motivates the untrained to rise to the occasion.

On the contrary, moving talented individuals into higher-level positions that don’t suit their training or their temperament can turn star performers into “dead wood”, drag down team spirit and impede corporate momentum. Consider technology companies seeking to reward gifted engineers by promoting them to supervisory roles. Not every excellent engineer has management training and a desire to lead a team. Moving successful developers into roles where they will be chafing to get back to the “drawing board” can doom them to failure—or send them bolting to competitors. Companies are often prone to this knee jerk reaction after layoffs, when it’s easy to promote people into positions vacated by their managers. The practice is sure to backfire without careful advance evaluation of the people being moved.

Myth #4—The right salary cushions the impact of discord.

People problems are a major reason for “talent flight”, regardless of how much team members are paid. A company in the records management industry recognized this, and reduced annual turnover within its sales teams from 50% to 23%--10% below the market average. This happened after the company changed its interviewing process to identify sales managers who enjoyed working with people, rather than having more general business smarts.

Part of being a “people person” means recognizing that to maintain smooth relationships with key team members, managers should also individualize their communications styles. For instance, emailing everyone with your division’s new goals will stimulate some people to action, and leave others believing that their contributions are being devalued. Being sensitive to these nuances promotes a more harmonious workplace atmosphere—leading to better retention than money alone can buy.

He who has the gold does not rule—but an apple for the teacher may. The companies with the best retention report cards chalk up their achievement to more than the U.S. Mint. Their “curriculum for success” lies in placing people in the positions that will bring out their best—and powering up their progress with highly individualized motivational strategies.

Dinah Daniels is President and Chairman of PI Worldwide, an international management consulting organization headquartered in Wellesley Hills, Massachusetts. Using a proven, proprietary management tool known as the Predictive Index®, as well as a flexible suite of skills-based workshops (the Predictive Leadership Series), PI Worldwide helps companies align individual performance with their specific business goals for improved bottom-line performance, productivity and profitability. Contact Dinah by e-mail: and visit .

Many more articles in Motivation & Retention in The CEO Refresher Archives


Copyright 2004 by Dinah Daniels. All rights reserved.

Current Issue - Archives - CEO Links - News - Conferences - Recommended Reading