Jul 22

I've been seeing a lot of articles and books out there talking about how motivation is not about money. Ideas that bonuses are more harmful than helpful and that what really motivates people to commit themselves to their work are relationships and culture. It's the people and being emotionally invested in what you do, not the money.

Well, this is true- in part. People are motivated by these things more than by money but that is not the whole story.

Take a quick search on Google and you can find plenty of the books, websites, seminars etc. on this topic all purporting to tell companies how more money isn't necessary and probably even a bad idea. Remember that these are people trying to sell advice to companies who are looking to keep expenses down. They are selling the answers companies want to hear.

Even though there is some truth to their answers- all good scams involve a grain of truth. I'm not saying that these things are all scams- just that they smell suspicious to me.

The reality is that if your compensation system undervalues your people they will leave. The folks that leave will be the most qualified as they are most able to find someone who will pay them a fair market rate.

If you are being paid 20% under market it doesn't matter how much you love your job. Eventually reality will hit home and you will realize staying where you are or leaving can mean the difference between your kids going to college or not. It might be the difference in retiring at age 55 or 65. These realities will eventually take precedence over liking your job and the people at work.

So please, before you decide to forego bonuses or raises think about reality. When you review the pay scale of your teams take a look at the actual market. If you pay your workforce significantly under market you will lose good people.