Does Pay Motivate People? Science Says “Not so much…”

One of the primary functions of leadership is getting people to accomplish a task. Effective leaders do this through influence and motivation. People were often viewed as homogeneous automatons at the advent of the industrial revolution, and their labor was regarded as a standardized input cost of creating some sort of product or service. Elton Mayo sought to experiment whether this paradigm was perhaps ill formed, and he wanted to see if individuals could be motivated by changing their working conditions.

To simplify what Mayo did, he increased the lighting in a factory, and observed worker productivity went up. And then he dimmed the lighting, and to his surprise, productivity increased again.  What Mayo stumbled upon created a whole new understanding of leadership and motivation. It wasn’t lighting that was motivating people, but rather the cue that someone was watching and observing them. This forced researchers to start viewing workers as sentient beings who are aware of their surroundings and have emotional reactions to that environment.

Abraham Maslow later did a great job at describing an individual’s motivation and how it relates to their environment, by creating the famous pyramid known as “Maslow’s hierarchy of needs.” The idea is people need things on the bottom of the pyramid the most, such as physiological needs and safety. If those needs are met, then people seek needs higher on the pyramid, such as a sense of belonging and self-actualization. This is important to understand, because the more of this pyramid people can complete by coming to work, the more motivated and loyal employees will be.

The reason salary and wages alone don’t motivate people has a great deal to do with Maslow’s hierarchy of needs. Consider what money can buy on the pyramid. Money can buy you food and vacations, which are physiological needs. Money can also buy you a home and security, which satisfies the “safety” needs. However, money cannot buy someone a sense of belonging, esteem, or self-actualization.  Therefore, increasing someone’s wages will only help them acquire more basic needs, and not give them higher order needs to increase their motivation. Pay could only motivate someone insofar they were underpaid to begin with, and the person has having trouble meeting their physiological and safety needs.

Frederick Herzberg keyed into this finding and went on to develop the “two-factory theory,” which showed most people are best motivated at work when they are tapping into their higher order needs, but they cannot reach those higher order needs until the lower order needs are first met.  In other words, “individuals are not content with the satisfaction of lower-order needs at work; for example, those needs associated with minimum salary levels or safe and pleasant working conditions. Rather, individuals look for the gratification of higher-level psychological needs having to do with achievement, recognition, responsibility, advancement, and the nature of the work itself.” – quoted from Wikipedia.

When you step back and think about these revelations, there is an enormous win-win scenario baked into human psychology and how an employer’s needs are met. It would appear that if someone is already paid adequately, there isn’t a need to significantly raise their pay to further motivate them. Rather, people will be much more motivated if you give them more trust and responsibility, if they are told they are doing a great job, and they feel they are contributing to a worthy cause greater than themselves. This arguably creates a corollary too, which is, people who are only motivated by pay are likely those who are showing up and doing the bare minimum, since they don’t care about work meeting their higher order needs.

And really, these psychologists seem to be explaining some real common sense notions we already understand from experience. People aren’t all the same, and they have emotional needs. They do need a basic level of pay to show up, but that ultimately doesn’t satisfy their emotional needs. The motivation you want as an employer is the sincere type that comes from people trying to master their job. You likely won’t find this from the people who are simply showing up to get paid. So it isn’t pay that is going to increase motivation, but rather empowering people to take more of their job into their own hands.