Role of Money in Motivation

Role of Money in Motivation

Money plays an important role in motivation. Managements make use of financial incentives for example wages and salaries, bonus, retirement benefits, health insurance, medical reimbursement, etc. to motivate the employees. However, these incentives may not always be motivating. In many cases, management may have to increase the financial incentives to keep, the employees with the organization. This can be appreciated from the practice of making wages and salaries competitive between various enterprises so as to attract and maintain good work force.

Money is a real motivating factor when the psychological and security needs of the employees have not been fully fulfilled. Money plays an importance rote in satisfying these needs. Therefore, management can use financial incentives for motivation. Money helps in satisfying the social needs of the employees to some extent because money is often recognized as a basis of status, respect and power. Money is also a significant means of getting a ‘minimum standard of living although this ‘minimum’ has the tendency to go up as people become more affluent. Money will not always be a motivating factor to all people. To some people importance of money will be reduced after a certain stage. To those people, non financial rewards are more important. They are motivated by money only up to the stage they are struggling for physiological and safety needs.

Money provides for the satisfaction of physiological and security and safety need only which have been called hygienic factors by Herzberg. Hygienic factors include wages and salaries and other fringe benefits, The presence of these factors at a satisfactory level prevent job dissatisfaction. They do no provide on the job satisfaction to the workers and, therefore, cannot be regarded as motivational factors. Herzberg’s findings are based on empirical research. According to Herzberg, in order to motivate the workers, it is necessary to provide for the satisfaction of ego, social and self actualization needs. But these needs are present generally in case of workers in the higher levels in the enterprise. Thus, we can say that people in higher positions, who get higher monetary rewards, are not motivated by increased financial benefits. They may be motivated by money only if the increase is large enough to increase their standard of living and status in the society. But in case of workers at the operative levels, money certainly plays an important role in motivating them because absence of monetary incentives will put their survival and safety into jeopardy.