Hacker News Reader

Comment by stephen_g | Hacker News Reader

There's a fairly clear misunderstanding here. I think it's absolutely true to say that money doesn't motivate people. For most people, giving them raises won't make them work harder, stay longer, be more creative, etc. - at least, not long term. And if there are problems making them unhappy, throwing money at them isn't going to help much long term either.

But if you're underpaying people or not giving raises, people quickly become unhappy and will either slack off or eventually leave - that's the 'certain point'! You absolutely need to keep giving good raises to keep good people there - but for most people it will just maintain their performance, not to motivate them to be better.

View on HN

The management courses I've done have said that money is a terrible motivator but a really powerful de-motivator.

It is a terrible motivator as the impact of a raise is short lived, we very quickly come to believe we are worth the higher pay. See Wall Street and SV salaries. Once you're happy with your pay things like challenging work, recognising success, personal development, good co-workers become much more effective.

It is a powerful de-motivator if you're being paid less than you think you should be, to the point that the weighting between the two effects is almost entirely on the de-motivation side.

Exactly. Money (as a carrot) like most tangible benefits (free lunch/drinks, foosball tables) won't motivate people for long. Weeks at most.

However, the lack of money (or other tangible benefits) that people feel owed is a huge motivation for those people to leave.

I usually interpret being underpaid as, "The company doesn't care about me." When the company doesn't care about me, I start looking elsewhere.

I also factor in inflation to this estimation. "The company thinks I'm worth less this year than last year, I think I'm worth more, lets see what the market says"

Thus far the market has always agreed with me.

The problem is that some managers appear to be confusing "studies show that in most cases extra money does not increase employee performance" with "employees do not want more money".

It's probably true that post-raise motivation boost is short lived, and people's expectations level out, and it might be even true that money could even act as a demotivator. But it doesn't mean people don't want more money and will quit if an opportunity shows up.

This has I think been known for a long time and can be seen @ the bottom of Maslows hierarchy of need

Reply on news.ycombinator.com