Merit pay does not always motivate employees

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By Tania Richman

"Show me the money!" We've all seen the movie Jerry Maguire. And, rest assured, if someone speaks those four words, you're almost always going to associate them with that unforgettable scene.

You know, the scene where Jerry Maguire is talking on the phone to his client, up-and-coming football star Rod Tidwell, and Tidwell tells Jerry to "show him the money." Now that you've gotten a visual, perhaps you paused a moment to reminisce over this 1990s classic or even yelled "show me the money" a few times for good measure . . . No? Just me? Okay, let's continue.

As much as I'm sure some people would love to step into their manager's office and tell them to "show me the money", that's probably not likely to happen. Truth is (and this might come as a surprise), it takes more than just money to keep employees motivated. Studies have shown that merit pay does not necessarily lead to an increase in employee drive, and that in some cases it can even de-motivate.

Aliza Hoffman took an interesting approach in a recent Wall Street Journal blog by comparing employees to students, and explained three key factors that lead to better performance: autonomy, mastery, and purpose. All three of these factors can be applied to managing talent. Most employees want to be self-sufficient, to be recognized for their contributions, and, most of all, they want to know their place and purpose within their organization.

Pay for performance is still a crucial part of any talent management process. But rather than focusing exclusively on a carrot-and-stick system, HR should center its efforts on the larger picture. Think of innovative ways to keep employees content and motivated rather than simply handing them a review and a pay increase once a year.

It's not always about money. It's a combination of factors that keep an employee motivated and wanting to stick around. Tap into your talent, find out what they want, what keeps them on their toes, and act on it.

Think back again to that famous scene. Before Tidwell utters his famous line, Maguire asks him",What can I do for you?" So here's some food for thought: Besides showing them the money, what can you do for your employees?

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