Employee Motivation

Don't Overestimate the Motivational Potential of a Salary Raise

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Employee motivation is a subject close to my heart. I believe it’s the single most important factor that fuels an organization’s growth story. When you look at a successful brand, what you see is the fiercely competitive spirit that comes across through its product innovation and sustained efforts to reach out to more customers through some astute marketing.

What you will not see is how the brand has seamlessly woven the threads of employee motivation into its corporate culture. Companies consistently posting profits know how to keep their employees happy and motivated.

Related: How to Motivate Employees in Less Than 5 Minutes

But motivating employees isn’t easy. It is a fairly complex task and there are times when even the most well-planned strategy fails to deliver the results you are looking for.

I’ve already talked about some unorthodox tactics that entrepreneurs can use to motivate employees. Now, I want to delve into what is seen by employers as a foolproof method that never fails to motivate employees -- the "salary raise.''

So, here’s my question – “Does money really motivate employees or are we overestimating its importance?”

On the face of it, there seems to be only one answer to this question - “Yes, it motivates employees and its importance cannot be overestimated enough.”

No brainer, right? But dig a little deeper and doubts begin to surface.

A tenuous bond

Even if there is a link between employee motivation and a salary raise, it is shaky at best. Think about it. The happiness linked to a pay raise wears off quickly. At best, it will have a passing impact on motivation. It’s common human tendency to want more, especially when it comes to salary. The raise you are offering an employee might never be enough. Dissatisfaction with the raise might begin to creep in quickly. That can hinder motivation and performance.

Related: 5 Employee Motivation Myths Debunked

There is a long time between pay raises

A salary uptick typically happens once a year, which means employees have to wait for a very long time between one salary appraisal and the next. Yes, your employees will be ecstatic with their salary hike but to think this state of affairs will continue till the next hike is stretching things a bit.

This means you can’t depend on a pay raise alone to motivate your employees. It’s just one of the tactics that ensures the people who work for you aren’t dissatisfied with their jobs.

More placation than motivation

A pay hike is a means of placating employees, not a means of motivating them. It keeps them in good humor. That’s it. Salary improvement can result in employees approaching their work with renewed vigor, but only for a short spell. After that, it’s back to square one.

I believe sustained employee engagement, respect, dignity, continuous learning, delegation, autonomy, accountability and responsibility to be far more effective motivational factors compared to a pay raise.

Don’t get me wrong -- it’s important that employees are paid fairly but to think this will motivate them to perform better at their job is a tad unfair. The reason why they are getting a raise is because they deserve it for all the good work they’ve done through the year, not because it will help them improve their performance.

"Better performance" can be seen as an ancillary benefit that might or might not happen. If you use a salary raise purely as a motivational factor, you might even end up rewarding non-performing employees.

What works is sustained effort

Salary increases should be just a part of your overall motivation strategy. Rewards are important but they are not the be-all and end-all of employee motivation.

You must make sustained efforts to make it easy for your employees to succeed and keep growing every day on the job. This is what will motivate them to work for your organization and deliver their best. As can be imagined, this is a continuous effort and not something that can be taken care of once a year by offering employees a salary raise.

Related: The 10 Biggest Motivation Killers and How to Fix Them (Infographic)