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Money as a powerful demotivator (don’t let this happen to your employees)!

Crystal Spraggins, SPHR A friend recently confided her salary to me, and I was shocked at how little she makes. I know my friend is worth a lot more, and I’m pretty sure her organization could pay more.

A friend recently confided her salary to me, and I was shocked at how little she makes. I know my friend is worth a lot more, and I’m pretty sure her organization could pay more.


But never mind my feelings. More importantly, my friend has some feelings on the matter, and they aren’t positive. In fact, I’d say she’s officially checked out.

Any opportunity to skip work, she takes. Most opportunities to participate in company gatherings, she declines. Of course, she’s actively looking for another job.

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When it comes to compensation, there’s an irony that every employer should recognize. While money often doesn’t motivate, it can nonetheless be a powerful demotivator.

Underpayment and the “blocked” employee

In “Blocked employees and money as a motivator,” James daSilva notes that too little money can be especially demotivating to top-performing employees who are “blocked” from earning more. These folks make regular and tangible contributions and are respected in the workplace, but their pay hasn’t kept pace with their value.

daSilva’s argument is that these employee are effectively underpaid and worse, have limited options to get “unblocked,” unless they leave the organization or a superior leaves the organization (thereby hopefully making room for the employee’s promotion).

daSilva writes:

“Better pay isn’t the final answer, but in many cases it can be an acknowledgement of an employee’s success—a temporary motivator, but one that encourages further development and effort even if promotion or being granted greater authority isn’t yet possible.”

The cold, hard cash reality

Getting compensation right is more complicated than many employers would like to admit. For one thing, while we all need money to meet our basic needs for food, clothing, and shelter, we also differ in our attitudes about money.

For example, I personally have a love/hate relationship with the stuff. Possessing it provides a certain level of security, and I need that, but I’ve never done anything for money I didn’t want to do. That’s why I left a hellish job despite the six-figure salary, mortgage be darned. Someone else in that same environment, however, would stay until she drops dead. Clearly, an employer could never hope to use money in the same way to motivate us both.

Yet no matter how elusive, the mystery of money motivation/demotivation deserves to be explored by all employers, because when employees aren’t incentivized (whether externally or internally) to do what you need doing, your customers, bottom line, and culture suffer.

And so I think about my friend, doing just enough to keep her job until something better comes along, and I know she’s far from an anomaly.

Are your employees being paid enough, but not too much, to provide the proper level of motivation to get the job done right?

Related webinar: Get Pay Right with PayScale Insight Expert

Crystal Spraggins
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7 Comments on "Money as a powerful demotivator (don’t let this happen to your employees)!"

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This is exactly what is occurring at my job. I think “your friend” you are speaking of is me. I took this job with high hopes and saw a great opportunity but with my arms and hands tied and the LOW pay which is WAY below the average in my city and state for my position makes it hard to stay motivated here.

I feel exactly the same! I have been with the company just over 4 years, as previous employees resigned their work load fell on me with no salary adjustment! From reception to site manager to accounting. When it comes to the yearly increase I get the lowest percentage with the words “you know you can be glad you get 5% because the suggestion was 4% this year.” and we don’t really have money. Yet they keep on spending as if there is no end. All my friends are shocked when they hear what I earn even those in lower positions… Read more »

Fabulous and insightful article, thank you! So, what is the plan of action one should initiate other than searching out a new position! Frankly, I have contemplated creating a company that would be to a degree competitor to the company I am now managing. I am an extremely driven and creative individual as well as loyal; and while life is a fabulous adventure, it is too short for this type of existence to continue.

Crystal Spraggins

@Elizabeth. Well, starting your own business is certainly one solution, and many have done just that! However, if entrepreneurship isn’t your thing, taking active steps to improve your skills is what I recommend. Where can you volunteer or what can you do on the side to increase your marketability and your earnings? I’d also look for gaps in your current organization. What needs doing that you can do and who can you pitch to be considered for the job?

In my company, we research the market to see if we are paying our employees “at least” at Market (median) once per year during annual increases. If needed, besides increases, employees will get salary adjustments.. Not all companies do this. I will suggest you discuss with your manager or HR your concerns about your salary, with some good “data”. You can look at free salary surveys such as Payscale (the best as you can customize it) and other sites (,, etc.) and bring the compensation details to the manager or HR to show how low your compensation package is… Read more »
Crystal Spraggins

@Debra. Have you presented data to management showing how your wages stack up against the average? It sounds like you’re a top performer (if you’re getting more than the suggested increase). Surely that has to count for something? However, if your company truly can’t pay more, or they won’t be convinced of the value of your FUNCTION (i.e., they value YOU, but they don’t really value your function relative to other functions in the organization) it’s probably time to get serious about a search, if you haven’t already.

Crystal Spraggins

@Margaret. What Jackie said. (Thanks, Jackie!) And hang in there, Margaret!

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