3 Reasons Why I Never Incentivize My Employees With Money (And You Shouldn't Either)

“Come on man! Okay, let me make you a deal. If you can close IBM in the next 3 months, we are going to promote you and also add $10k to your salary. How does that sound??? Okay, then let’s get to selling!!”

How often do you hear business owners and CEO’s giving money as an incentive to employees in hopes of getting them to over-perform?

Quite often, right?

However, research does not support this obvious positive reinforcement as a solid means of getting more out of employees.

The reality is that money is nice and all, but it alone is not enough to motivate employees to perform better, work harder, be more productive and time efficient and take initiative.

Lots of small business owners think  that if they can just get the right people on the train with them, there will not be any more need for any extremal motivation.

Even though these top performing individuals will be insistent on getting competitive salaries, they do not require any extrinsic motivation.

They seem like natural go-getters.

They don’t seem to be people who would ever consider doing anything less than their absolute best, no matter what the situation is.

As a general rule of thumbs, people tend to work harder if they think that there are prizes for great results and penalties for bad ones.

With the exception of absolutely creme employees, most companies need to have some sort of way to motivate their workers.

It is of no question that money is definitely a driving force, but we all seek and desire more than monetary compensation by itself.

My personal experience working with people as employees has shown me that people also want to be acknowledged as key players who made a difference and are part of the reason behind a winning team.

This basically means that people want to rest assured that the company they are with is making progress and is doing well.

They want to know that their work is playing a role in creating success.

They want their hard work to be recognized as part of the winning team’s success.

Anytime you get the chance, take time to celebrate success.

Just meaningless “good job” will not work. If the company is actually not performing well, management needs to realize and take note of that reality and let the employees know.

But, even when a business is in trouble, if at any point, it starts doing well again, that progress needs to be noted to all people at the company, not just within the upper management.





1: Celebrations let employees know that the company is doing well and things are going great.

This is the first of the three things which are required to motivate employees.


2. Second thing is that employees need to know exactly how what they are doing is the reason for the success of that company.

So, how will they be made aware of this? Their direct supervisor needs to tell them. And as a CEO, if you cannot think of what ways an employee is contributing to the success of your company, then maybe you should reconsider that employee or that position in your company as a whole.


3. Finally, most employees want their hard work and efforts to be highlighted in some way shape or form.

Money is definitely one way to do that.

But even simply just saying “ thanks man!” when they do a good job on something can be immensely rewarding to an employee.

Instead of always calling out your employees on what they are doing wrong, try to catch them doing things correctly and acknowledge that they are doing it well and thank them for it.

Also, take that time to remind them how much you appreciate them and how valuable of an asset they are to the company, because after all, they are!

When you address an employee on his or her good works, be very specific in what they did correctly and what you are thanking them for.

Also, be sure to link that particular behavior to the company or a professional goal.

Things such as extra vacation time, a timely gift certificate, and awards at company meetings and ceremonies will go a long way to motivate and incentivize employees at any company anytime.


Carrots are awesome, but my experience shows that in order for it to be super-effective, we need to have some stick along with it as well.

Employees need to understand that poor performance and negative behaviors also have consequences.

So, yes, you can definitely make the argument that there are a few rock stars who don't need any motivation at all, but the thing is that most people do need some form of external motivation to perform at their peak.

These rockstars are very expensive. Mom and Pop shops can't afford them.

So, if you are a small business owner and you want superstar employees who help you make a lot of money, you need to focus on more than just money.

You need to see them as people and barrow it down to what specifically makes another human being happy and makes them want to do their absolute best at work.