What’s Money Got to Do with It?
Money is a form of energy, and here's how that energy affects workers.
Posted July 16, 2019
By Laura Freebairn-Smith, MBA, PhD
Despite all the literature and research on motivation, of which there appears to be millions of pieces of writing and thinking, the holy grail of a perfectly defined pathway to worker motivation doesn’t exist. I think this is because the theories are great and explain a lot but they miss the larger mark.
They do not question the system in which the worker is embedded and the system’s assumptions about hierarchy, fair pay, the effects of the social class of the person’s family of origin, and more.
Workers and bosses work in a system that represents hundreds of years of thinking about work, relationships, organizational structure, and power in a very specific way.
This way has evolved over many centuries and millennia in a limited biosphere (earth) by a species (human beings) that is at the early stages of manifesting its capacity for compassion, sharing, self-awareness, and very long-term thinking about its best interests as a species, and how individual behavior affects those best interests.
Current work systems and structures, even in communist countries, are about control, hierarchy, and individual self-survival or aggrandizement.
Getting more resources is an encouraged goal, even more than one needs, sometimes at the expense of the greater good. The desire for resources grows naturally out of our biological imperatives, but modern capitalist aspirations and a frayed social network have fostered a drive in many to amass as much as possible.
The problem is that we do not live on a planet of infinite resources, so it is not a win-win when one person amasses more wealth or uses more natural resources than they need. “As of 2007, the richest 1% held about 38% of all privately held wealth in the United States. while the bottom 90% held 73.2% of all debt. According to The New York Times, the richest 1 percent in the United States now own more wealth than the bottom 90 percent.”
So what does this have to do with money and motivation? I want to encourage the reader to question the fundamental underpinnings of their organization’s compensation structure. First, research shows that poverty or being one of the working poor or being economically vulnerable is psychologically stressful and causes people to make poor decisions, get sick more, and be more angry more frequently.
Looking at net worth helps us to realize the stress of being economically vulnerable. The median net worth for American white families in 2016 was $171,000 versus $17,000 for African-American families.
Imagine that you are white and you lose your job. You sell all your assets and pay off all your debt; you have $171,000 in the bank. You get your annual budget down to $40,000. You can live for over four years without a job.
Play this out for the African-American family: they can live for five months without a job. Imagine the impact on your choices about jobs and work.
The very first thing a company’s compensation structure needs to do is provide a true living wage, especially in the United States, where a living wage is not uniformly mandated across the country. What is a living wage? It is not what the government says it is. The federal minimum wage is $7.25/hour (equivalent to approximately $16,000 annually), and it has not been raised in ten years. Imagine yourself living on that? Why would you expect anyone else to do so?
The security guards at one of our client sites were paid $10/hour. That’s $22,000/year BEFORE taxes. After taxes, it might be $18,000 year. That’s $1,500 a month. That’s not a living wage. The question to the CEO was, why not pay more? “Because that’s the going rate in our market.” Hmmm…. How about breaking out of that compensation paradigm and saying, “We will pay a living wage for all employees?”
“But it might decrease our profit margin.” So what? As Peter Block, the author, once said in a workshop I attended in the 90s at Yale University, “Why wouldn’t you pay your staff as much as you can?” I would add, “And why are you paying yourself so much at the expense of others?”
Money is a form of energy. It’s how we exchange energy. Money is not inherently evil; it is what one chooses to do with it that makes it an energy force for good or for bad; good and bad manifesting in the long-term impact of choices made around money.
Paying a true living wage to your staff has short-term reductions in profit but significant payoffs for your community, for the well-being and future success of your workers’ families, and ultimately for the company. I also encourage readers to provide financial literacy training to their staff. For a world fixated on money, we provide virtually no training in how financial systems work and how to manage one’s money.
So once a worker has a good living wage (preferably even more than that), what role does money play in motivation? I still think Herzberg[iv] got it basically right in his two-factor theory of motivation. One set of factors are hygiene factors: the de minimus items an organization must provide to avoid dissatisfaction. These items do not bring satisfaction or motivate staff, but they avoid dissatisfaction. Hygiene factors include pay, workplace safety and cleanliness, fair policies and procedures, and others.
The other set of factors are motivation factors. These increase satisfaction, and different people are satisfied to different extents by different motivation factors. You have to talk to individual employees and find out what will increase their satisfaction. For some employees it might be learning new skills; for others, it is the opportunity to self-manage; for others, it is the freedom to innovate. And, that can change over time.
Motivation theory does show that after your company gets the hygiene factors right, there are some motivation (satisfaction) factors that are commonly effective. Hackman and Oldham’s Job Characteristics Model[v] talks about three psychological states needed for internal motivation: experienced meaningfulness of the work, experienced responsibility for outcomes of the work, and knowledge of the actual results of the work.
As a manager or leader, you can create programs, policies, management and leadership practices, and communication methods to increase motivation in these three psychological states.
But first, fix your compensation system and change the world.
Laura Freebairn-Smith, MBA/Ph.D., is Partner, Organizational Performance Group.
[iv] Herzberg, F., Mausner, B., Synderman, B. (1959) The motivation to work (2nd edition), John Wiley, New York, NY
[v] Hackman, J., and Oldham, G.R. (1980) Work redesign, Addison-Wesley, Reading, MA