Financial Motivation

Financial motivation is the use of monetary incentives to encourage desired behaviors, typically in the workplace.

The Basic Idea

Did you receive a bonus this year? How about a raise? Maybe you got some stock options? Regardless of the method, one thing remains constant: our work is often rewarded with the promise of extra cash. This is called financial motivation: the use of money as an incentive to promote a certain behavior. 

The equation seems like a no-brainer: more money = more motivation. While getting a bonus feels great, behavioral science argues more financial motivations aren’t always effective. In fact, they can sometimes harm employee motivation, if done incorrectly.