A brilliant article based on a survey by Martin Dewhurst a director in McKinsey’s London office reveals some interesting findings of related to common beliefs regarding the financial incentives for motivation.
Many financial rewards mainly generate short-term boosts of energy, which can have damaging unintended consequences.
Numerous studies have concluded that for people with satisfactory salaries, some non-financial motivators are more effective than extra cash in building long-term employee engagement in most sectors, job functions, and business contexts.
The respondents in the McKinsey Quarterly survey view three noncash motivators—praise from immediate managers, leadership attention (for example, one-on-one conversations), and a chance to lead projects or task forces—as no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options.
Which are the top three non-financial motivators?
The survey’s top three non-financial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth. These themes recur constantly in most studies on ways to motivate and engage employees.
The HR directors McKinsey researchers spoke with, for example, emphasized leadership attention as a way to signal the importance of retaining top talent.
You may like to read the full essay at:
My take on the above findings
I entirely agree with findings of the above survey. However I feel the challenge lies in addressing the organizational culture. The focus has to be on the macro-organization. The culture as well as the leadership must be embedded in the values and philosophy. The people must identify with the core purpose destiny of the organization. It is not easy unless the leadership leads from the front. Here I wish to present once again an inspirational quote:
“Life is not worth living, Without a purpose or meaning” – Buddha
The debate – financial versus non-financial motivators will therefore become quite meaningless. People will be self motivated and respond to organizational crisis and down-turns beyond all expectations. Their levels of emotional stability too will be very high leading to quality decision making and productivity.
As always I look forward to your critical comments. Thank you.
Very true sir, so goes the fact that excess of everything is bad. Money is no exception. But since the line itself is not clearly drawn.. It’s really really very personal..
Perspectives are drastically different n depends if you are in the bottom or on the pinnacle.. the entirety that encompasses the transition (from the bottom to the top..)is what may get exemplified!
Thanks for your thoughts provoking posts… 🙂
PS: the moment Money started dominating the barter system it has taken over all the material facet of life. SO, even if money is not everything..it’s so..so much of a thing!
Hey there Manish,
Money is surely important and a fact of life “the whole thing is that hat ki bhaiya sabse bada rupaaiya”!! is apt. पर boss मुझे ये बताओ की ‘सबसे बड़ा रुपैया’ — कब तक? बहुत ज्यादा पैसा भी नुक्सान कर सकता है … ”!!
Examples of Corporate greed examples are replete. Each individual has his own financial liabilities and family responsibility. But knowing when to draw a line is a question whose answer cannot be prescribed by anyone. Perhaps it may come from within at some point in one’s professional life.
In this context I would like to quote Subroto Bagchi the co-founder of MindTree from his latest bestseller ‘The Professional’. Where he speaks of “Looking Beyond Money” …. “A professional who sees his work primarily as a means of earning runs out of meaning, very soon. Beyond base comforts, after a while, the quest for material success actually erodes self-worth”.
Thanks a lot for your spirited response.
All I feel on the issue has come to the fore.. Less posts attract so much fare..
The question is when every knows the importance of money and the convenience it brings with it, why do we keep on negating the value derived out of it? The famous saying goes, “the whole thing is that ki bhaiya sabse bada rupaaiya”!!
Employee engagement can be derived from the Maslow’s hierarchy of needs. this can form the basis of the research. Every employee is at a level where his motivators differ – financial and non financial. Even 2 employees in the same position with same package would have different motivators.
The gallup engagement model also supports different levels and motivators. now this is where the role of a manager comes into play. For example for an employee who has personal liabilities, the only factor for him is financial figures, he would focus on how to reach that level. While for someone being recognized is important – he would like appreciations, rewards, which may be non financial.
According to the research report the 3 non financial motivators are –
1. Praise from immediate manager
2. leadership attention
3. chance to lead project or task force.
There are others which again depends on the level the employee is in the pyramid of the organization.
Thanks for the visit. Views coming from a lead consultant and a senior HR professional like you are indeed enriching.
My students who read and discuss the comments will enjoy and learn a lot. Regards.
i feel that all the theories about non-monetary motivation is all good once money is ample and this always happens with people who have successfully climbed the ladder to a position where money is not much of a problem but to every one else before that stage it is always “Show me the money, Honey”……
Shantanu you are absolutely spot on. No one should think of crossing the mantra of “Show me the money, Honey”. Thanks for dropping by 🙂
I would like you to elaborate on micro-organization…is its the teams and groups…can you tell me how to put in context of mckinsey 7 S model
I have heard people refer to teams as micro-organizations. Though it is not typified as a classical organizational structure. You are aware that a 7-S approach tries to bring a balance and sync in all the factors. And so it may apply to teams primarily through team leadership. The leader has access to all the members personally and can virtually provide a real-time response.
I must admit your question made me think hard 🙂
I fully agree with the statement that financial motivators boost short term energy in an employee and most importantly, it gives rise to EXPECTATION of getting more and more……which can create a problem for the organization and the individual in future.
Financial motivators can push a person up to a certain limit to perform but the potential of non-financial motivators are limitless.There are number of people in different organizations,who are continuing with their job irrespective of low salary compared to other high-salaried jobs available in the market. The reason for their continuance is that they are being valued and respected in their organizations. Financial motivators are like giving a dive in the pond whereas,non-financial motivators are liking diving into an ocean.
I would like to share another thought regarding the term INSPIRATION and MOTIVATION.I personally believe that nobody/no element can motivate anyone.Motivation is always self-driven,what we actually get by meeting/interacting with different people,reading different books,watching movies is INSPIRATION.
I would like to conclude by sharing a thought that “What an Organization practices,is what its employees follow”.
Your views are quite amazing. I tend to resonate with your beliefs implicitly. The metaphor of “financial motivators are like giving a dive in the pond whereas,non-financial motivators are liking diving into an ocean” is so apt and perhaps is the essence of the debate.
Thank you so much for applying your mind. Regards.
Can people ever identify with the core purpose of an organisation over and above their concerns, issues, worries, interests. Even if they do, to what extent do they actually do so? Finally, is it really desireable to ask for such commitment unless you are say, an armed forces, defending society and nation?
The need for individual motivation and engagement will always be there. The key to good management is to find the particular non-financial strokes/rewards which motivate a person in conjunction with monetary rewards. The more critical a person is to an organisation, the more the need to look into how to meet his needs best so as to retain him.
Ashwin you have provided a frank and insightful analysis on these opposing view points. Your question “is it really desirable to ask for such commitment unless you are say, an armed forces, defending society and nation?” is quite thought provoking.
You are absolutely right the monetary aspects have to be in place. Even the McKinsey study refers to ‘people with satisfactory salaries’. Ideally an organization must build on values and ethics to create a fulfilling culture and not with any underlying motives. People’s commitment may come on its own and spontaneously.
Thank you for your valuable comments.
Human behaviour is much complex to have any simplistic theories or findings explain it fully. It would be more likely that those who name the non-finacial motivators as more important are relatively well off financially. Because, I guess, one gives importance to those things which you don’t have and less to those which you have (enough). Will all these be motivated if they receive praise from boss and his face time on daily basis but not ‘enough’ salary? I guess not. They would say ‘ John , you are nice person, very friendly and a good coach, but you know, I need to move on as I have that house loan and ….
Another phenomenon closer home could be ‘ i enjoy the job very much, but I want to give the best of education to my kids for which I need money and hence it is very imprtant to me !!!!” Higher level needs finding satisfaction through the lower level one from the Maslow’s hierarchy.
Off course, in this world there are some diehard who would do things not for money but for self-esteem, self-actualisation, etc. But these are only a few.
To me, money is the table stake to make mare go. However, one should not forget the economic ri=ule of ‘ diminishing rate of return’. When the basic needs are provided for, money may get marginalised as a motivator and other qualitative aspects would become more relevant.
Last one – people have tendancy to say one thing and not necessarily behave the same way. Many a times we cheat ourselves by responding to surveys in the way we think we should rather than what we really feel.
I guess this should generate some reactions !!!
Great comments. The reality of financial and non financial motivators are reasoned out convincingly. I agree with you that the ‘Beyond money’ folks are far and few in organizations.
The only ray of light I feel is in the youth of today whose aspirations if nurtured may make a little more difference and bring some balance in the race for money.
Your views have indeed generated some very insightful responses. Thank you for sparing your valuable time.