Normality vs. abnormality
7.5 Money, Motivation, and Happiness
152 All in the Mind: Psychology for the Curious
The most frequently rehearsed criticisms of the Hawthorne studies are that:
● They lack scientific validity and tend toward mysticism. Human relations writers generally spent little time gathering the data necessary to sup
port their claims. When they did, they were rarely obtained in a system
atic manner. For this reason they project an aura of mysticism or
“armchair philosophizing,” which is unacceptable to the modern behavioral scientist.
● They overemphasize the group and focus on group decision making. In human relations writings the object of concern almost always appears to be the relationship of the individual in a group, with less concern for the behavior processes of the individual.
● They view conflict as fundamentally destructive. Little concern was given to the positive effects of conflict, such as the stimulation of innovation.
Coordination was always the goal.
● They are evangelistic. Advocates were insistent upon the value of human relations concepts in solving organizational problems. It has been shown that human relations, like structural thought, is a creed of the establish
ment and supports the preeminence of management in an organization.
● There is no effect. Some have agreed that a detailed study of the results in fact provided little evidence of any demonstrable effect at all!
Much of the objection to the human relations perspective has been initi
ated by modern behavioral scientists who are interested in many of the same phenomena. Behavioral scientists are concerned with the systematic analysis of human behavior and take pride in the objectivity with which they approach their subject and their adherence to the conventional meth
ods of experimental science. They also view their research as interdiscipli
nary in character and realize that it is often difficult, if not impossible, to understand the sociology of a group separate from the psychology of the individuals comprising it and the anthropology of the culture within which it exists. However, there have been few subsequent studies, of whatever scientific quality, that have had such an influence on work psychology as the results of the Hawthorne studies.
Nearly everyone is paid – in money – for work. But organizations differ widely in how money is related to performance. The question of central interest to organizational psychologists is the power of money as a motiva
tor, which works in several ways:
● Piecework. Here workers are paid according to how much they pro
duce. It can be judged only when workers are doing fairly repetitive work where the units of work can be counted.
● Group piecework. Here the work of a whole group is used as the basis for pay, which is divided between the group.
● Mixed productivity bonus. Here there is a guaranteed weekly wage, plus a bonus based on the output of the whole department.
● Measured daywork. This is similar except that the bonus depends on meeting some agreed rate or standard of work.
● Merit ratings. For managers, clerical workers, and others it is not pos
sible to measure the units of work done. Instead their bonus or incre
ments are based on merit ratings made by other managers.
● Monthly productivity bonus. Managers receive a bonus based on the productivity of their departments.
● Profit sharing and co‐partnership. There is a guaranteed weekly wage and an annual or twice‐yearly bonus for all, based on the firm’s profits.
● Other kinds of bonus. There can be a bonus for suggestions that are made and used, and there can be competitions for making the most sales, finding the most new customers, not being absent, and so forth.
● Use of other benefits. Employees can be offered other rewards such as medical insurance or care of dependents.
Traditionally it has been assumed that money is a hygiene not a motiva
tor factor. That means, in short, that issues around money such as believ
ing that one is not paid at market rates or not paid equitably are a major source of dissatisfaction. However, it is not a motivator. Being paid appro
priately does not increase satisfaction or productivity – but not being paid enough certainly causes dissatisfaction.
Does money bring happiness?
Is money the best (the only really successful) motivator in the workplace?
If money does not bring happiness, what does?
154 All in the Mind: Psychology for the Curious
Researchers have argued that there is plenty of evidence that there is effectively no statistical relationship between money paid, subjective motivation, and measurable performance in a job over time. It is suggested that there are four reasons for this:
● Adaptation – although everybody feels happier after a pay rise, windfall or lottery win, one soon adapts to this and the effect rapidly disappears.
● Comparison – people define themselves as rich/wealthy comparing themselves to others. However, with increased wealth, people usually move in more upmarket circles where there is always someone wealth
ier than themselves.
● Alternatives – as economists say, the declining marginal utility of money means that as one has more of the stuff, other things like freedom and true friendship seem much more valuable.
● Worry – an increased income is associated with a shifting of concern from money issues to the more uncontrollable elements of life (for example, self‐development), perhaps because money is associated with a sense of control over one’s fate.
Even the evidence for performance‐related pay (PRP) is far from con
vincing. The aims of such systems are straightforward: Good performers should be satisfied by working hard and motivated to continue to work hard because they see the connection between job performance and (merit‐pay) reward. Equally, poor performers should be motivated to try harder to achieve some reward, or leave.
There are different types of PRP systems, depending on who is included (to what levels), how performance will be measured (objective counts, subjective ratings or a combination), and which incentives will be used (money, shares, and so forth). There are various reasons for the failure of PRP systems.
First, there is frequently a poorly perceived connection between pay and performance. Many employees have inflated ideas about their performance levels that translate into unrealistic expectations about rewards. Often the percentage of performance‐based pay is too low relative to base pay. That is, if the organization starts off with too little money in the pot, it may be impossible to discriminate between good and poor performance, so threat
ening the credibility of the whole system.
The most common problem lies in the fact that, for many jobs, the lack of objective, measurable work output requires heavy, often exclusive use of performance ratings. These are very susceptible to systematic bias, which renders them neither reliable nor valid.
Many PRP plans have failed because the performance measure(s) that were rewarded were not related to the aggregated performance objectives of the organization as a whole, that is, to those aspects of the performance that were the most important to the organization. Also the organization must ensure that workers are capable of improving their performance. If higher pay is to drive higher performance, workers must believe in (and be capable of) performance improvements.
In short, Miner (1993) has argued that five conditions need to be met to ensure that any sort of incentive plan works (see Figure 7.2).
Money is important but so is job security, a considerate boss, reasonable holidays, and manageable stress levels. At certain times in their lives people are prepared and able to trade off quality of working and home life for money. Its power as a demotivator may be reasonably strong, but its power as a motivator remains low.
Money also remains a topic that few happily discuss. There are all sorts of reasons why money remains a taboo subject. Various theories have been put forward to explain this:
● Rich people, who dictate etiquette, eschew discussing their money lest the poor figure out how to get it for themselves. Or because friends and relatives might want it or become envious of it.
(1) The employee must value the extra money that he or she will make under the plan.
(2) The employee must not lose important values (health, job security, and the like) as a result of high performance.
(3) Employees must be able to control their own performance in that they have a chance to strive further.
(4) The employee must clearly understand how the plan works.
(5) It must be possible to measure performance accurately (using indexes of performance, cost effectiveness, public relations ratings).
Figure 7.2 Conditions for an incentive plan to work.
156 All in the Mind: Psychology for the Curious
● It is superstitious to talk of money: It means it could be taken away.
● Boasting about money could encourage envious others to inform tax authorities.
● If money is associated with food, avoiding discussing it reduces hunger, need, greed, and vulnerability.
● If money is associated with filth in the eyes of people, shunning discus
sion of it can be a way of fending off feelings of shame.
● On some levels we know our attitudes to money reveal a lot about us that we would rather keep private.
Myers (2000, p. 59) has posed the old question:
He reviewed the salient literature and concluded:
Further the evidence suggests that economic growth in affluent coun
tries provides no boost to morale and happiness. Faith, friendships, and belonging as well as personality factors are clearly more important.