Does More Money Always Lead to Better Productivity at Work?

motivationNot according to Dan Pink, author of several books about the changing world of work, who believes that when you need employees to solve problems creatively, offering a financial incentive can actually hinder productivity and distract employees from the task at hand. Pink references studies on motivation that suggest that when given a task that requires a creative solution, subjects performed better when no incentive was involved. He also suggests that employees perform better in non-restrictive work environments with limited structure.

There are some companies that are embracing the concept that the best way to generate great ideas from employees is to offer them a non-restrictive environment to do just that. At Google, employees have "free work times" where they can work on a project that interests them. This "free-time" has contributed to a large chunk of the total successful innovative developments for the company.

Yet as companies continue to tighten their belts, more and more are adopting a tailored pay for performance compensation structure to motivate employees with money and truly differentiate above-average performers from mediocre ones. They are doing this in an effort to retain their top performers in an economy where the average merit increase is just 2.5 percent.

Which theory is correct? Is there really a right and wrong answer or are different people just motivated by different factors? What motivates you at work? Take our poll and let us know your thoughts.

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