The Limits of Money as a Motivator

What’s the Latest Development?

Paying individuals more money has long been seen as an acceptable and effective way of motivating them to do better work, but recent research highlights the limits of money as motivator. In the case of students, offering financial rewards for scholastic achievement can rob them of internal motivation, and even large sums cannot compete with the allure of smartphone apps as a distraction. In the case of workers, mid-range financial reward does not increase proficiency at routine tasks, and large sums may even increase the pressure under which workers operate, causing them to choke under the strain. 

What’s the Big Idea?

Instead of money, businesses have found that offering employees time is an alternative that increases productivity and makes individuals happier with their work. Flextime has become an established way of doing business and companies like Intel and Yahoo are offering their employees what amount to sabbaticals, which have typically been reserved for academics. Other companies are experimenting with “prosocial” benefits. At Google, for example, employees can give another worker a $150 bonus, but they must write at least a sentence explaining what that recipient did to earn it.

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Read it at the Washington Post