[MUSIC] In this session, we're going to consider, can money fail to motivate. And even demotivate employees. And if so, when and how? Articles in popular management journals and many management courses have made the case that money either actually demotivates or is at best not a motivating factor for several decades now. Think about the entire range of activities that you do in relation to your work, everything that takes some time and effort. And that effort can be physical, intellectual, or emotional. And then ask the question, amongst that range of activities, are there any you would be less likely to do if you were paid for doing it? For example, offering to fetch coffee or donuts, taking interest in a coworker's welfare, and so on. Why do we do things like that? Do we do it out of calculation of advantage, or out of enjoyment? If we do them because we derive some kind of pleasure from them. Then, this is so-called intrinsic motivation as opposed to extrinsic motivation when we perform an act to receive a reward, most obviously money. The work psychologist Duchess argued that if you start rewarding someone for an action they originally did because they were intrinsically motivated to do it. That will crowd out the intrinsic motivation and overall, actually demotivating. So following this line of reasoning, if you paid an employee to, for example, warmly greet their colleagues, they could actually end up doing it less. Incidentally, Frederick Herzberg, who was mentioned in the first session, had a similar argument to Duchess. In that he suggested that pay is just a hygiene factor. People have to earn enough to prevent actual dissatisfaction. But beyond that, it would not actually motivate. But the evidence that pay can actually demotivate is far from convincing. As the psychologist Bandura pointed out, do concert pianists really lose genuine interest in playing the piano just because they get large fees for doing so? But Frederic Hasbroucq certainly made a useful point in suggesting that for many people, interesting and absorbing professions such as medicine, for example. Financial considerations will not determine the day to day effort. But if they consider themselves seriously underpaid, they may consider withdrawing from that job or profession. Another approach to think about is Adam's famous equity theory. Which simply proposed that if an employee thinks the rewards received are not a fair reflection of what the employee brings to the job in terms of effort, skill, and so on. The employee may react by reducing their effort. In other words, unfair pay can demotivate. This ties in with what we discussed earlier in terms of retention. So managers take on board, it is pay is perceived as less than fair, that can have negative consequence for motivational effort. Again, we discussed earlier the importance of communicating with employees when for example, a pay cut is imposed. And that is very relevant here. So let's just briefly summarize some of the key lessons for managers from this course. Pay at least the market level if you want to retract, retain, and avoid negative feelings, leading to potential demotivation. Communicate the reason for important pay decisions to your staff. The employees you are most likely to value, the educated, self driven and confident, are those most likely to respond well to performance related pay. Particularly, individual performance related pay. And make sure that the link between pay and performance is clear and understood. Then determine whether to introduce group level or individual level performance rated pay. Based on the extent which performance can be genuinely attributed to the efforts of individuals. So then, thank you for following this course which I hope you've enjoyed. In the time we've had available here, it's only possible to introduce a topic as complicated as pay and motivation very briefly. But I hope this would inspire you to study this in more depths. Thank you again. [MUSIC]
