When Money Motivates

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Big salaries can be a very strong lure to hook new recruits. However, it's not always the best bait. Candidates can be motivated by a number of other factors such as flextime, education and training, or the chance to work from home.

The challenge for companies is knowing when you need to up the ante – and when you don't. This is especially important now as the economy is coming back down to earth from the sky-high salary ride of the dot com frenzy.

The best way to think about the role of money in motivating job candidates, and employees, is to consider why people work and what they want from their jobs. Based on research by

Frederick Herzberg, a leading behavioral scientist, this can be broken down into two categories: Satisfiers and Motivators.

Satisfiers (also called maintenance factors) are the things that people must get from a job in order to expend a minimum effort, such as good working conditions, an equitable salary, and a certain level of benefits.
Motivators are the things above and beyond Satisfiers that stimulate people to put in more time, more effort and more enthusiasm into their work. Things like individual recognition, support and appreciation, awards programs, and special acknowledgements can go a long way in building loyalty.

Simply heaping on more maintenance factors, such as money, won’t necessarily motivate people to accept a position or work harder.

What’s happened in the past few years is that money has come to be seen as an automatic motivator. With the amount of cash flying around dot coms and people been getting rich quick, job candidates often come into interviews thinking that they deserve huge paychecks when in fact they don’t.

Now, thankfully, times are changing and businesses need to realize that they don’t have to feel bullied into the money trap. Businesses need to stop and ask themselves when is money going to motivate and when is going just be more money.

There are two things every company should do before beginning the interview process with new recruits.

Scrutinize salaries. Make sure that your existing salary structure is where it should be. You need to have a clear understanding of the going rate for any given position. This requires doing a periodic market analysis for average wages and benefits. It will help to insure you’re not overpaying, or underpaying, your employees. In addition, it will give you the information you need to negotiate with savvy interview candidates. Keep in mind, more and more job applicants are doing their own salary comparisons before they come in to meet with you. You don’t want to get into a situation where your applicants are more knowledgeable than you are.

As part of the market analysis, also consider where your company is on the desirability scale. If your business is number one in your market, you don’t need to automatically succumb to demands for higher salaries. Don’t underestimate the value to the prospective employee of the chance to work with a leader. If you aren’t the biggest guy on the block, other things can make your company more desirable place to work, such as an entrepreneurial environment or the chance to grow with an up-and-comer. Be careful, however, to not oversell your business’s potential.
Talk with the troops. talk with your existing employees to find out what they value most about working with your company. Simply asking, "What keeps you here?" can provide the information you need to sell the positive aspects of your business environment in a very persuasive way. Remember, money may be what influences an applicant’s decision to take a job, but it’s rarely the reason for staying. What’s more, opening the lines of communication with employees can help to increase productivity and improve morale.

Fast forward – you’ve done your homework and have a prime candidate sitting across the desk. How do keep salary discussions within the realm of reality?

Clarify how pay is assessed. Candidates need to understand how your business makes money, and in turn, how this relates to their compensation. What’s more, a quick lesson in Business 101 can be very beneficial for existing employees. Too often, employees don’t have any sense of how their salary is tied to revenues. Just making sure everyone knows the difference between your company’s gross and net profits can significantly raise awareness and make employees more sensitive to the bottom line.
Define bonus structures. If bonuses are a part of the overall compensation package, make sure the candidate clearly understands that this is above and beyond salary and is not to be considered a given. For bonus or any incentive program to work it has to be based on productivity. Otherwise, it’s simply gratuitous and doesn’t serve any real business purpose. What’s more, it can actually backfire. If you give everyone the same bonus regardless of how hard people work,, it can de-motivate your workforce.

Fast forward again – the interview is winding down. It’s gone really well and you’re thinking this person could be a definite asset to the company. But the candidate is still not convinced and he or she is asking for more money than the position offers. The question now becomes, should you give in or let this one go?

The morale factor. First, consider what raising the stakes would do to your overall salary profile. Before extending a higher offer, ask yourself if doing so would throw off your compensation structure to the point that you couldn’t justify the business purpose behind it. However, if you can justify it – if the person brings unique knowledge or skill sets that you don’t have in your existing employee base – then upping the ante makes sense.
Ponder the competition. Another reason for increasing the salary incentive is to gain a competitive advantage. For example, if you’re interviewing a candidate who you know is also interviewing with your biggest competitor, and you don’t want them to go to the competition, then you may want to up your offer.
Plan for the future. Lastly, if you think the candidate is someone who could fill a key role in your succession planning, this too would add value beyond the job description to justify a higher base pay.

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