Conventional wisdom holds that the thought and pursuit of money promotes selfish tendencies, and it’s also commonly accepted that people who are exhausted become more self-centred because they lack energy to focus on others.
Hollywood has caricatured such behaviour in the form of the sleep-deprived, greedy banker.
A new study published in the Journal of Business and Psychology, however, draws a novel and “more nuanced understanding” of the role of money in employee behaviour – finding that the thought of money can make drained employees more energised, reining in selfish impulses and making them more likely to act in the interest of others.
“When people are low in self-regulatory energy (depleted), reminders of money do not make them even more self-centred but decrease the occurrence of selfish acts, facilitating considerate ones,” says the study co-authored at Cambridge Judge Business School.
“Money is a familiar concept in everyday life: People talk about it, carry it, manage it, or think about it. In times of fatigue, reminders of money can offer strength to self-regulate, empowering people to act in the interests of others besides only the self.”
The authors say their research is “novel” because other studies on the effect of money typically focus on compensation, while the new study looks at the “general notion” of money on behaviour – which could help companies find ways to promote “other-centredness” among staff.
“Long hours and fatigue are a part of many modern workplaces, so it’s an important organisational challenge for companies to foster considerate tendencies when employees are exhausted,” says David De Cremer, KPMG Professor of Management Studies at Cambridge Judge Business School, who co-authored the study with Dr Aurelia Mok of City University of Hong Kong.
The study – entitled “Too tired to focus on others? Reminders of money promote considerate responses in the face of depletion” – was based on more than 350 adult participants in the US and Hong Kong.
Some participants were asked to perform tasks designed to deplete energy, such as typing an underscore (_) symbol to replace all spaces between words and punctuation; participants were asked whether they would help colleagues in office situations, such as retrieving an important document; and participants were asked to list five aspects of either money or cardboard to separate them into “money priming” and control groups.
The study found that, for depleted participants only, reminders of money increased the tendency to volunteer for tasks that were considerate of others.
“Employees tend to become unethical and selfish when they are drained of personal energy,” says the paper, citing previous studies. “Our research shows that when people are drained or depleted, general thoughts of money, not limited to compensation, offer feelings of energy under which self-centred responses decrease.”
For practical implications of the findings, the authors suggested that “organisations could enhance the salience of money in general (e.g. exposing employees to cash or coins), particularly after (or even during) work situations that drain energy,” the study says. “This could provide a short-term boost in energy that helps employees to rein in selfish impulses and show consideration of others.”
Companies want employees who are motivated to work hard and work ethically. Many of us assume the best way to incentivize that is by offering a promotion or a big bonus for a job well done. But is that really the case? Are there sometimes better ways to motivate employees?
We have researched which employee incentives work best. And, it turns out, our instincts about cold hard cash are not always right.
1. Sometimes Financial Incentives Are the Best Option
Promotions are the ultimate motivator. But not all companies have the ability to dole out promotions as incentives. What can you do to keep employees motivated if your organization’s structure is relatively flat, with few promotions to go around?
Companies that can’t offer promotions can still motivate employees by paying them more. Another idea for startups and other fast-growing firms is the promise of new opportunities down the road as new teams or departments get added. Firms that are expanding are going to find it easier to use career-based incentives. When the firm’s growth starts to level off, you have to adjust expectations, because you have significantly less flexibility. For companies that are not growing quickly, you might want to give stock options or award bonuses.
2. How Employee Incentives Can Backfire
So employees like being rewarded with money. But dangling a bonus as an incentive comes with risks for employers. Imagine a CEO who wants to meet the earnings target that triggers a big bonus, so he opts to cut maintenance expenses to a potentially dangerous level. Or a company that offers salespeople monthly bonuses for hitting a certain quota. On the last day of the month, the sales team is likely to offer steep discounts to customers to get over the line.
So how do you structure monetary rewards to encourage hard work while discouraging reckless risk-taking or gaming of the system? A downside to rewards that are triggered at a specific threshold—say, 1,000 cars sold a month—while nothing happens just below that threshold, when 999 cars are sold. Namely, this type of contract does not necessarily align an employee’s incentives with that of the company.
The best option for assuring alignment is a simple or linear contract, where reward is directly proportional to performance. There is no threshold to game: a CEO is compensated equivalently for the same rise in profits regardless of whether the firm barely hits or barely misses its target.
3. Risk Aversion Can Motivate Executives
Companies do want to encourage smart risk. Yet that may not happen when managers are compensated with stock grants. Stock ownership can incentivize executives to play it safe in hopes of protecting the value of their stock portfolio and preserving the sheen of success that will land them their next job. Instead of using equity as an incentive, use stock options when you want to motivate executives to take smart risks.
4. Do Performance Incentives Make Us Greedy?
An employee in a commission-based job feela differently about money than a worker with a fixed salary. People who are rewarded based on their performance express more desire for money than people who receive fixed payments—even when the amounts they ultimately earn are similar. Companies might want to consider the consequences of increasing workers’ materialism, such as tougher negotiations with employees who want higher salaries or eventually losing workers to better-paying jobs.
5. Employee Incentives at Nonprofits
There’s another reason why employers might want to avoid touting a job’s financial incentives: for nonprofits, high salaries can turn away applicants committed to the organization’s social mission. Increasing financial incentives, especially in the social sector, could backfire.