Wednesday, May 20, 2009

Leadership more important than $$

Leadership is more important than money, that is what a recent survey of Federal employees found. Not surprising, we have known for years, or at least argued for years, that money was a pretty lousy motivator. The study, conducted by the Office of Personnel Management, jives (that is the technical term) with what other studies showed, that people are likely to leave their job because of their boss, not the benjamin (that means $$, my aim is to educate). 

The notion that money doesn't serve as a primary motivator is not new, yet organizations continually use money (salary, stock options, other financial incentives) as a primary source of motivation. There may be a reason for this, some studies show that what is important is relative pay. In other words, perceived external equity the primary factors employees consider when looking for a new job or considering whether they want to move to another job. 

The debate seems to be more than just theoretical (or in this case survey hypothetical), as investment banking firm Morgan Stanley recently revamped its compensation methods in anticipation of new guidelines from the TARP monitors. (see Financial Times article at

So this takes us back to the original issue, yes money may play a part in motivating employees, but smack (eg$$) and pay are only relative considerations. What seems to be more important is leadership and how you compare to others. Once again, we see that basic psychology tends to trump economics in explaining human behavior!

Here is a link to the original article that appeared in the Washington Post

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