Naturally, paying employees higher salaries has some huge benefits. Looking at recruitment alone, a higher starting salary has the benefit of making your company more attractive to prospective candidates.
However, when it comes down to it, does a higher rate of pay actually motivate employees to work harder? It’s debatable.
Does money make us happy?
‘YES,’ I hear you cry.
Well, a study conducted by Edward L Deci and colleagues suggests otherwise.
In the study, 128 controlled experiments were conducted, in which the effect of incentives (ranging from dollars to marshmallows) had on intrinsic motivation (such as enjoyment and being challenged).
The study found that the introduction of incentives caused people’s intrinsic motivation for completing tasks to decrease.
So basically, the study found that if you give people more monetary rewards, their personal motivation for completing tasks decreases!
Do you want people in your company to be solely money motivated – or do you want them to feel satisfied and be passionate about their role? We’re guessing the latter.
That said, commission-based roles are renowned for attracting driven people – does it really matter why people are motivated if they work hard?
Money and staff retention
Job satisfaction aside, money is one reason why people look for new roles.
It’s important to periodically review staff salaries, and ensure that they rise with the industry average.
Don’t forget to take into account the years of experience employees have gained while working for you.
Keeping your employees’ rates of pay rising is a great way to stop people from jumping ship to a new company.
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