Does Money Really Incentivize Employees?

In a recent conversation a woman who was lamenting her recent college graduate son has been unable to find a job. I asked what he majored in and she said he was an engineer.  I commented. “I thought engineers are in demand” to which she said, “he wants to work in finance”.  “Guess he wants the big bucks” I said and she smiled. Throughout the years people have debated what really incentivizes people in the workplace.  If you listen to those in the finance industry they say its clearly money.  From a Requisite Organization perspective being paid fairly for the work being done coupled with working in an atmosphere characterized by trust, respect and recognition is the answer.  I recall discussions with Dr. Jaques wherein he’d express outrage and frustration at the belief you have to dangle a carrot in front of people to make them work effectively.  He’d invite his audience to look at the underlying values and belief systems from which they were operating.  Now with the younger generation in the workforce we have a new set of wrinkles that complicate the situation.  They come with a different view on the role of work in their lives. See Younger workers.

There was also a story this week about a young entrepreneur in SC who has instituted a $50,000.00 bonus for all of his full time employees if they work at the company for 5 years.  See Money.  At 30, Dan Schneider, has already had two successful companies.  His last company sold for $35m.  Presently he has 30 full time employees. The company, SIB, is three years old with revenues of $6M projected for 2011.  He has recognized that hiring and training employees costs thousands.  By offering the $50K bonus to full time employees he hopes to engage them and create a sense of loyalty.  He has two years to test out his theory.  Anticipating rapid growth over the next 18 months he is hoping this incentive will develop loyalty.  He also anticipates that the longevity bonus will keep people happy.  “When employees are happy they perform better”, he says.

Schneider is experimenting with a new model.  Only time will tell how effective it is.  Personally, I’d like to think that effective managerial leadership within a culture characterized by colleagueship, coupled with fair pay is enough to motivate employees to be and do their best.