Is money a motivational tool for employees in the workplace? That is a question that has been debated and researched upon for ages, in an effort to find out the influence that money has on human motivation. Organizations have long wanted to find out if and how much money influenced motivation levels, which, in turn, influenced employee productivity. While no conclusive evidence has been drawn out of the studies, it may safely be noted that money does play an important part in employee motivation.
But money does not impact motivation levels directly. The influence that money has on employee motivation, and hence, on employee productivity, first affects the happiness levels of employees. Motivation theory, hence, should find out if money adds to employee satisfaction. However, bear in mind that the “Happiness” variable is independent of work and other such factors as job satisfaction or organizational commitment. To be able to influence human behavior, money should first add happiness to employees as an independent variable, before it goes on to influence work motivation.
And even the effect that money has on happiness depends on the sort of people that we consider. For instance, it has been found through employee survey and research that in any given nation, people tend to be happier with more money, than when compared to people who do not have sufficient money at their disposal. It is only logical because money represents their purchasing power – the more the purchasing power, the more the happiness.
However, when compared between employees of developed nations and developing countries, people with average income displayed little difference in their happiness levels. Further, the influence of money also depends on the quantum of focus that employees have on their currencies. In one study, it was found that people who were paid on an hourly basis tended to be happier when compared with people whose salary was on yearly basis. While this may sound surprising, the variable that is in play, apart from the perceived correlation here between remuneration and work hours, is the type of people in question – those who were paid on an hourly basis tended to be a lot more focussed on money than those who worked on yearly paychecks.
The idea, therefore, is that money is a complex variable and its effect on employee motivation and productivity cannot be inferred through casual observation and gut feeling. It takes a lot more organization research to arrive at a conclusion regarding the power of money as a motivational tool in your workplace.
Passion for Writing and Business; Post-graduation in Management; Some useful managerial experience and International Exposure; Belief in Risk-taking and in the spirit of the entrepreneur. That's me. 
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