Every management textbook I’ve ever seen includes Herzberg’s 2-factor theory as a model for paying employees. Those who follow Herzberg seem to agree that managers should pay employees just enough to put the question of money to rest, but not more. That’s because he believed that while a lack of pay can weaken motivation, extra pay does not translate into greater incentive.
I find it curious that Herzberg’s ideas are still so widely taught and practiced, despite the fact that his theories get mixed reviews in terms of real empirical support.
Does money motivate? Based on the evidence, my best guess is that, like most ideas in management, it all depends. Research shows that sometimes it does and sometimes it does not, so a better question to ask is “When or why does money motivate, and when or why doesn’t it?”
My hunch is that investment bankers and commissioned salesmen find a pay raise extremely motivating, while social workers or military personnel may be completely incentivized despite lower pay.
In other words, some people love money and pursue it with zeal – whereas others are more passionate about something else. I don’t have any research to back me up on that (let me know if you know of some).
But it seems like common sense, wouldn’t you agree? My problem is, that if this is so logical (like it seems to me) then why do people still apply Herzberg’s theory so liberally or dogmatically in the workplace? Can somebody find a management textbook that doesn’t bow to Herzberg’s theories? Given the mixed empirical support, I really don’t get it.
Unless the issue lies with the interpretation. If that is the case, you can still add me to the list of Herzberg supporters.
Most would agree that money motivates a person that is having difficulties making ends meet. But does money motivate the wealthy?
Consistent with Herzberg, I would argue that money does not motivate the wealthy, even though they may report to researchers that it does. Instead, I believe the wealthy to be motivated, not by pictures of dead presidents, but by what money represents. Freedom? An easy metric to compare in a competition with others in their field? Success?
Now, would someone please collect some data so I can quit feeling like such a hypocrite, espousing hypotheses without support?
 This notion is consistent with recent research by Hancock, who reported that consultants found money to be motivating, acting as an indicator of status with implications for their self-esteem and a sign of how valuable they were to their organization.
Personal preference is only one of the conditions researchers have found. To dive into the debate, you may want to start your study here:
Cameron, Banko, & Pierce (2001). Pervasive negative effects of rewards on intrinsic motivation: The myth continues. Behavior Analyst, 24, 1-44.
Deci, Koestner, and Ryan (1999). A meta-analytic review of experiments examining effects of the extrinsic rewards on intrinsic motivation, Psychological Bulletin, 125, 627-668.
Hancock (2006). What value does money play in the motivation of knowledge workers such as project managers? IEEE International Engineering Management Conference, pp. 127-131.
Herzberg (1968). One more time: How do you motivate employees? Harvard Business Review, 46, 53-62.