What Are Advantages and Disadvantages of Motivating Employees With Money?

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Money is a useful tool for motivating employees, but results can be mixed and unexpected, including the advantage of boosting production and the disadvantage of encouraging possibly unethical behavior. It is wise to research all the possible results for a particular policy before implementing it.

For example, with bonuses based on productivity, employees will accomplish more and meet higher quotas if they know they will receive additional pay. However, they may take shortcuts and produce lower-quality work because they are focused more on quantity.

Another example is that if money is used as a motivator for referrals, employees are more likely to recommend the company to their friends and family who are looking for a job. This could increase the number of applications received. However, the referred applicants may not be as qualified for the jobs as other applicants.