Jon R. Katzenbach and Zia Khan

Jon R. Katzenbach and Zia Khan

4/06/2010 @ 12:13PM

Money Is Not The Best Motivator

The old Horatio Alger stories capture the American dream pretty well. Those who work hard, apply themselves and play fair, they tell us, will be amply rewarded. Those who avoid responsibility, exploit others and cheat will get their comeuppance. This notion is at the heart of American entrepreneurialism and professionalism, and of American artistic and sports endeavor as well.

So why do people like Jeffrey Skilling and Bernard Madoff get away with so much for so long? There is no simple answer, but those two were both in it for the money, it appears, and there is ample evidence to suggest that money may not be the best way to motivate desirable behavior. In fact, it may be one of the worst ways.

Most successful entrepreneurs say that their primary motivation has been to build something lasting, not to make a lot of money. Certainly great professional leaders like Marvin Bower, who built McKinsey & Co., John Whitehead, the former Goldman Sachs senior partner, and Supreme Court Justice John Paul Stevens would tell us that their motivation came from the work itself, and that the lasting respect of others was far greater than money as a measure of accomplishment. And very few great artists are in it for the money. Money is a byproduct, and usually a secondary one at that, for such achievers.


What works better than money?

It depends on what kind of motivation you’re after. Money is better at attracting and retaining people than at influencing their behavior. Those of us who subscribe to the writings of the authority on motivation Frederick Herzberg, who died in 2000, believe that the most effective way to motivate work behavior is by focusing on how people feel about their work itself.

Recent studies by David Rock, an executive coach, and Jeffry Schwartz, a neuroscientist, have identified several motivators that influence behavior more effectively than money. For one, people want to elevate their status. Organizations often assume that the only way to raise an employee’s status is by a promotion, but status can be enhanced in many less costly ways. The perception of status increases significantly whenever people are given credible informal praise for daily tasks rather than waiting for annual results.

People are also motivated by having autonomy, but more money doesn’t often equal greater perceived autonomy. In fact, you usually have to give up autonomy to rise up the compensation ladder. The real heart of autonomy as a motivator, however, rests with the perception that you are executing your own decisions without a lot of oversight or rules, which is hardly common in the corporate world today.

Similarly, feelings of relatedness and fairness are motivators. They are determined more by informal interactions, social networks and daily perceptions than by money or formal promotions.

This is not to suggest that money doesn’t motivate. Certainly it encourages self-serving materialism. But those who rely on money as their sole or primary motivator are on perilous terrain, particularly if they ignore other more powerful and emotional sources of human motivation.

A few years ago we did research with elite military units that included the Navy Seals, the Green Berets and the Marines. Not surprisingly, we found that money is not what motivates an emotional commitment to such groups. We also learned that pride in daily training exercises was almost as important a motivational force as pride in the unit. And the Marines spend 75% of their military life in training exercises.

The Marines’ boot camp takes 12 weeks while other services take 8. Those 12 weeks are devoted to exercises designed to inculcate the Corps’ emotional values of honor, courage and commitment. During that arduous period, recruits are required to do all kinds of anxiety-producing things like leap off high towers, swim in deep water with full backpack burdens and run miles up and down hills.

Their drill instructors are master motivators whom they initially hate and fear. Before long those instructors become aspirational role models who breed respect, courage and commitment. A drill instructor is up at the crack of dawn before his recruits, works into the night preparing for the next day and changes his uniform several times a day. (He always looks the part of a Marine leader.)

To understand the emotional commitment that drill instructors engender, we conducted a focus group discussion with some eight recruits 10 weeks into their program. One of them was a young woman about 5 feet tall who weighed less than 100 pounds. She looked a bit out of place to us, so at one point we asked her what had attracted her to the Corps. Her impassioned reply remains a permanent fixture in our memory: “Gentlemen, the Marines make me shine — every single day!” That is pride in one’s work at its best, with money irrelevant.

Over the past five years we have studied many master motivators like that woman’s drill instructor. We have conducted hundreds of case studies across dozens of companies. And the results are always the same. Money just doesn’t matter much. Some use it, most don’t. For those who do, it is but one small element in a motivational arsenal. Their primary focus is on finding emotional connections, sources of pride, that they can use to make each and every person they affect feel good about their daily tasks. And they succeed no matter how boring, difficult or unpleasant the job may be.

Thus, they instill the kind of emotional commitment that is never self-serving, never short term and always energizing. Their secret is that they use informal elements of their organizations — personal networks, relationships, feelings, values — to counterbalance the formal. The more you rely on money as your weapon of choice, the more likely you are to encourage self-serving behavior.

To avoid the money booby-trap remember:

–Emotional commitment dwarfs purely rational compliance every time.

–Money encourages self-serving short-term behaviors better than it motivates lasting institutional achievement.

–An overreliance on monetary rewards invariably erodes emotional commitment.

–Pride in one’s work itself is what brings on lasting improvement in behavior.

–The informal elements of motivation are at least as important as the formal ones.

Jon R. Katzenbach is a senior partner in the New York office of Booz & Company. Zia Khan is vice president for strategy and evaluation at the Rockefeller Foundation. They are the authors of Leading Outside the Lines: How to Mobilize the Informal Organization, Energize Your Team, and Get Better Results, published in April 2010 by Jossey-Bass.

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