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

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.

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