As studies have shown time and again, an increase in salary does not equate an increase in contentment, motivation and performance, e. g. Judge et al., The relationship between pay and job satisfaction, Journal of Vocational Behavior 77 (2010) 157–167.

It’s not necessary to read this or any other study—just ask yourself: did you come to the office the day after your last raise and thought “Yes, now that I get more money, I’ll really get some work done today and do a particularly awesome job!”? Even if there was a little motivational nudge on day 1, how did you feel a week – or a month – later?

Reward systems work fairly well with dogs, pigeons or rats. Human beings however cannot be enticed with treats to walk through a labyrinth in the long run. In spite of this, many companies try to use salary increase as a motivational tool. Even more weird is the practice to justify a raise with feedback, i. e. justifying the future salary with past – even wrong! – behavior.

Money keeps employees from leaving. It is, if at all, a tool for retention, not for motivation. To approach this topic from a neuropsychologically meaningful angle, one has to only consider everything (!) that has worked well. Those who have done a lot right will receive an extra raise.

It is different with bonus payments, which help to focus behavior. In sales, for example, they can be used to reward the sale of one product over another. These bonuses have no influence on general motivation, but rather enforce one type of behaviour at the expense of another.

Rules for sensible salary talks

  1. Have one (!) conversation about the topics development and salary. Discussing them separately – even if it’s common practice – does not make any sense.
  2. Focus on learning, development, potential, positive aspects and the future, and spend only a short amount of time on salary and – if applicable – bonuses.
  3. Give feed*forward*. This might be an unfamiliar term. It means: do not focus on past behavior (back), but instead on future behaviour (forward) … because this you can still change. Ask: “What do you need more of in the future?” Give feedback only if there was clearly suboptimal behavior during the relevant period of time.
  4. Establish a general salary increase for everybody and offer – as mentioned earlier for retention, not motivation! – slightly more to those, who did exceptionally well. Reward special achievements and focus behavior by paying a bonus.

How to increase employee motivation – without a raise

When a raise does not work for motivation – what does work? First of all, it is important to recognize that it is not particularly helpful to assume one can actually actively motivate others to do something. Motivation is always intrinsic, i. e. it comes from within a person. However, you can help your employees to better motivate themselves.

Our brain likes positive challenges. So ask your employees straight out related to work:

  • What is exciting?
  • What inspires you?
  • What do you want to learn?
  • Which projects would you like to realize?
  • What would you like to try out?

Once answers to these questions start coming in (often it takes a while, since employees are not used to being asked directly), create space for these challenges. Here are a few standard suggestions:

  • Create opportunities to learn, basically contexts in which your employees can learn and work together with other competent people,
  • increase the flexibility of the job and
  • offer resources to realize projects.

In short: focus on creating an environment in which employees can motivate themselves. This is easy, and it requires a bit of courage to try something different – and implement it consequently.

CHANGE1: Create Motivational Impulses

Our compact CHANGE1 workshop can support you in creating the best possible contexts to help your employees stay motivated – and increase their motivation without creating a salary rat race.

Give us a call: +49-40-37644588