ROLE OF MONEY AS A MOTIVATOR

V.Lenin and K.Vijayaraghavan

          In a organization a manager keeps on trying to maximize the input so that the profit increases. Employee is a key resource. A difference between him and other resources is that he is a living organism and he has emotions. Manipulation of the emotions proves to be potential tool in deriving the best performance out of an employee. An emotionally charged employee performs better and remains focused in his goal. Hence the psychologists studied what motivates a man. The managers also started realizing the importance of psychology and analyzed the contribution of psychology to improve the efficiency of employees.

            What motivates an employee? Many psychologists over the years, developed several theories of motivation. Does money motivate an employee? Money may be in any form like salary, bonus, increment, etc. The main factor that attracts quality employees towards organization is the pay package. To retain him for long and get the best performance out of him a manager searches for the motivating factors. The company offers him incentives, increments, bonuses, etc. Does money motivate him again and again?

            Let us dwell into the theories of work motivation. Over the period of time, many scientists developed theories of motivation. It is grouped into three categories in the line of evolution viz content, process and contemporary theories of work motivation.

A. CONTENT THEORIES OF WORK MOTIVATION

            Abraham H. Maslow (1943) developed a theory of motivation. He stated that a man moves from one level of needs to other level only after that need is achieved. The need motivate him to action. Once that need is satisfied it ceases to motivate him. Fred Luthens (2005) perceives that money as a physiological need, which means money is a low level motivator. What I feel is money is a self-esteem level motivator. Money is also a status, providing self-esteem. Thus, money is a strong, high-level motivator.

            Herzberg et. al.(1959) grouped the factors into two viz hygiene factora and motivators. Hygiene factors does not motivate an employee. If it is lacking, it will cause dissatisfaction. Herzberg included salary in hygiene factor. His theory says that money is not a motivator.

B. PROCESS THEORIES OF WORK MOTIVATION

            Victor Vroom (1964) proposed the expectancy theory of  motivation. His theory states that the motivational force leads to first level outcome and further effort leads to second level outcome. Expectancy relates motivational force to first level outcome and instrumentalities relate first level outcomes to second level outcome. Thus money is considered as a highest level motivator.

            Porter and Lawler (1968) proposed a model which includes satisfaction. Probability and value of reward motivates a person to make efforts. Efforts lead to performance. In the process efforts are influenced by abilities, trials and role. Performance brings intrinsic and extrinsic rewards. The perception of individual about the reward leads to satisfaction. Hence, money fits in the extrinsic rewards. When  extrinsic reward is performance based, it will provide greater satisfaction.

C. CONTEMPORARY THEORIES OF WORK MOTIVATION

            J. Stacy Adams said that a person compares his input and output with others’input and output. If it is unequal he strives to bring to equality. This stiving is called motivation. Money fits in output.

            According to Edward P. Lazear (1979) workers and firms enter into long-term implicit contracts that discourage shirking and malfeasance by shifting compensation to the end of the contract.

            “… firms that offer seniority-based pay are less likely to offer explicit incentives in the form of piece-rates. They are also less likely to invest in monitoring devices.  … firms that offer seniority-based pay are less likely to engage in other personnel practices that imply long employment relationships. These practices make the firm’s commitment to pay high future wages credible and therefore are contemporary measures to implicit incentives.” (Bayo-Moriones et.al., 2004)

            On average, there is a 60 per cent probability that administering extrinsic rewards such as money to employees performing interesting, challenging tasks will increase their level of intrinsic motivation more than those who do not receive extrinsic rewards (Wierma, 1992).

            “…poorly performing doctors would leave, that more productive doctors would be induced to join, and those groups placed under Pre-Comp Earnings (PCE) would be more profitable. Increased revenues and not decreased costs were the primary source of financial gain for the practices placed under PCE. This occurred at a time when the underlying prices for the services provided were roughly constant, so the significant increase in revenues must have come from an increased quantity of services provided or a reshuffling of services provided towards more highly-reimbursed activities.” (Barro and Beaulieu, 2000)

Conclusion

            Money is a motivator. It motivates an employee in choosing the organization, performing better throughout his career.

Luthens,F. (2005). Organizational Behaviour. McGraw-Hill:Singapore.

Maslow,A.H. (1943). A theory of human motivation. Psychological Review, 370-396.

Barro,J.R. and Beaulieu,N.D. (2000). Selection and improvement: physician responses to financial incentives. Harvard NOM Research Paper No. 00-03. Harvard University: Massachusetts.