One of the most controversial topics talked about in business is the idea that money is a motivator. By default, it is not. Motivation is an internal driver. It is a complex system of values and priorities unique to each individual.  

External drivers are called incentives. It is most certainly not the same as motivation. External drivers have two major differences from internal ones. First, the reward is “on the outside.” It’s a thing like cash or prizes and is usually provided by someone else. Money is not a motivator. It is an incentive. This gives it a major boost over motivation because it has immediate impact. Do this thing, get this cash. 

Money, or more generally, external incentives, generate immediate activity. But it then typically dissipates drastically. The dopamine wears off. The shine goes dull, especially if the task is difficult or the results are inconsistent. Motivation is a long-haul carrier. It’s difficult to get started, but small wins and persistence pay off deep dividends. 

The second difference is that if an incentive is an external object, it is limited in availability. You can spiff $5 a tire and get an immediate boost to that specific tire sale. Over time, as mentioned, the shine wears off and sales dip back down, even if that $5 spiff is available. In order to refresh the incentive, can you spiff the tire $10 now? How about $15 in a month or so? The resource is limited. 

Buying your employees lunch is another example of an incentive. Sure, pizza on Fridays hits the spot, but if it becomes every Friday, you get no pop in productivity, and if it becomes an expected reward, you’re starting to tread into entitlement territory. 

Not only does the pizza not produce an increase in productivity, but when you take it away, employees will complain. Loudly. The same issue exists for monetary rewards. The Christmas bonus is a prime example. Give out Christmas bonuses “just because” for a couple of years. The first year, almost everyone will be super grateful and appreciative of your kindness. By the third year, there may be some grumbling that the bonus hasn’t increased. The fourth year you decide the juice isn’t worth the squeeze, and you will encounter a drop in performance — passive-aggressive retribution for not handing out what is now an entitlement. 

Use the two reward systems in conjunction and play off their strengths. Jumpstart an initiative with a limited-time incentive. Then test receptivity. If the horse is dead out of the gate, you have a loser that no one is interested in. If it generates a boost, find the connection from incentive to long-term motivation. Maybe the added money feeds a safety net during a recession. Maybe the spectacle of giving out the reward makes that special extrovert on your team feel greatly appreciated. If your crew has been hard at it for several years breaking records and working long hours, maybe pay for a weekend off, babysitter included? 

Incentives work magic when done right, with short bursts, instant gratification and near-universal appeal. Yet money is just a symbol. For some, it represents status. For others, it’s the chance to buy something. That might be food for one family or a video game for a different employee.  

Incentives burn bright hot, though. They need a start time and an end time. Without both, incentives will always reduce productivity eventually and will cost you more money the next time you try to revive it. 

Motivation is a long game. It’s deeply personal to each individual. It’s a set of internal levers and switches and dials. You don’t control it and you never will. You’re not on the inside. Some employees are not articulate or self-reflective enough to even describe what their internal drivers are. They might even tell you “money,” but it isn’t the money. It can’t be. It’s not even the thing money represents. It’s the act of it — the accomplishment.  

No amount of money will cause someone to abandon their internal motivators. The danger here is that if you dangle money as a tease to motivation and the task you assign is a conflict or is too difficult — or the reward doesn’t fully satisfy the long burn that motivation requires — the entire endeavor becomes a waste of resources and time, which you can’t get back.