How Money Motivates

How Money Motivates By Dr. Jason E. JonesIt’s been a popular stance, over the past decade, to say that money hinders intrinsic motivation on the job.


This belief is based on popular thought and teachings that started in the mid-1970’s based on the research of Edward Deci and Richard Ryan. The ideas has gained more momentum over the past few years after the release of Daniel Pink’s book Drive that explains Deci and Ryan’s Self-Determination theory.


In this view, money and extrinsic reward, undermines intrinsic motivation. This concept has excited business leaders and human resource executives as it seemingly provides support for the argument that high levels of motivation on the job is not directly related to salary and bonuses.


Even more attractive to corporate senior leaders (for obvious reasons) is the notion that money can actually hinder intrinsic (internally derived) motivation.


But wait! There is more research that has been ignored that counters this view of monetary reward in the workplace. Dozens of studies have been conducted in work environments to disprove the belief that intrinsic motivation is undermined by extrinsic reward for all people.


These studies show no undermining effect. In fact, a number of studies prove monetary reward and incentive can significantly increase motivation, task-focused energy, performance, and goal attainment. A study by The International Society for Performance Improvement found the following.


  • Tangible incentives, including money, significantly increased intrinsic interest in work tasks.
  • Money and awards yielded a 22% increase in performance.
  • Money and awards increased persistence towards a goal by 27%.
  • Incentives directed towards teams increase performance by 45%.
  • Monetary incentives increased performance 14% more than gifts.


A way to think of money or incentive is as a vehicle of intrinsic motivation. Money can be an avenue for a person to pursue and satisfy intrinsic needs. Yes, money can actually be a driver of intrinsic motivation.


I’ve used prior blog posts to describe a contemporary view of motivation that focuses on people’s internal needs and desires that drive motivation and energy. Stopping to think about why anyone would be motivated to do certain activities steers us away from making the false conclusion that people work only for extrinsic reward as an end result. Rather, people utilize reward (that some call extrinsic) as a means to an ends. The “ends”  being the intrinsic desire. That which truly generates motivation.


You and I just don’t work for unrelated reward. Instead we are motivated by much deeper needs. We don’t work to accumulate money for the sake of having more “greenbacks” in our pockets. Instead, it is what the money leads to. Money is but a vehicle in our attempt to pursue our needs and desires.


For example, a person may use money to save for retirement which satisfies the intrinsic need for tranquility and perhaps family. Another example is that a person may utilize money to afford a nicer car or bigger house, thus pursuing a need for status and acceptance. Money can aid in or give the perception of aiding in many of the other 16 intrinsic needs.


The purpose of this blog post is not to persuade people to pursue more money, nor to coerce companies to pay more. That’s not my point. Instead, leaders and employers need to understand both the motivational value of monetary reward, as well as other means for which to help people pursue their intrinsic needs.


It’s so much more than just money. It’s about better understanding what intrinsic desires best motivates ourselves and for leaders to better understand the intrinsic desires that motivate their employees. Understanding that money, bonuses, benefits, and special rewards can help a person satisfy intrinsic needs is eye-opening and can create new insights.


It’s in this understanding we can truly lead, coach, and create environments that activate the natural motivation that drives people toward fulfillment, high performance, and personal success.


Research Source: Incentives, Motivation and Workplace Performance: Research and Best Practices, The International Society of performance Improvement (2002)