Impacts of Financial Incentives on Human Motivation

Financial incentives are a common tool used by organizations to motivate their employees to perform better. The idea behind financial incentives is that by offering a monetary reward, employees will be more motivated to work harder and achieve better results. However, the impact of financial incentives on human motivation is a complex issue that has been the subject of much debate and research. In this article, we will explore the impacts of financial incentives on human motivation, drawing on the insights provided by recent research studies.

The Positive Impacts of Financial Incentives on Human Motivation

Research studies have shown that financial incentives can have a positive impact on human motivation. For example, a study conducted by Lee (2015) found that financial incentives had a significant effect on the performance of medical personnel, which was the result of an increase in motivation based on the given financial incentives

. Similarly, a study by Basu & Kiernan (2016) found that financial incentives can affect healthy lifestyle changes, which is almost identical to the subject of motivation

. These studies suggest that financial incentives can be an effective tool for motivating employees to perform better.Another way in which financial incentives can positively impact human motivation is by providing employees with a sense of fairness. Dessler (2017) argues that giving incentives requires a fair and decent employee perspective. Fair has the meaning of financial incentives given the company in accordance with or commensurates with the work and achievements achieved by employees

. When employees feel that their efforts are being recognized and rewarded fairly, they are more likely to be motivated to continue working hard and achieving better results.

The Negative Impacts of Financial Incentives on Human Motivation

While financial incentives can have positive impacts on human motivation, they can also have negative impacts. One of the main concerns with financial incentives is that they can undermine intrinsic motivation. Intrinsic motivation refers to the internal drive to perform a task because it is enjoyable or satisfying in and of itself. When external rewards are introduced, such as financial incentives, they can reduce the intrinsic motivation of employees and make them less likely to perform the task for its own sake.

Another concern with financial incentives is that they can lead to unethical behavior. Research studies have shown that financial incentives can create a strong desire to achieve the reward, which can lead employees to engage in unethical behavior to achieve their goals.
.This can be particularly problematic in industries where ethical behavior is critical, such as healthcare and finance.

Conclusion

In conclusion, financial incentives can have both positive and negative impacts on human motivation. While they can be an effective tool for motivating employees to perform better, they can also undermine intrinsic motivation and lead to unethical behavior. To ensure that financial incentives are used effectively, organizations need to carefully consider the potential impacts and design their incentive programs accordingly. This may involve setting clear goals, providing feedback and recognition, and ensuring that the incentives are aligned with the organization's values and culture. By doing so, organizations can harness the power of financial incentives to motivate their employees and achieve better results.References:

1. Financial Incentives: The Impact on Employee Motivation - Allied Business Academies
2. Financial Incentives in Employee Motivation - 585 Words | Essay Example - IvyPanda
3. The Problem with Financial Incentives - and What to Do About It - Knowledge at Wharton
4. Financial Incentives and Student Achievement: Evidence from Randomized Trials * | The Quarterly Journal of Economics | Oxford Academic
5. When and Why Incentives (Don't) Work to Modify Behavior - American Economic Association
6. When Do Financial Incentives Reduce Intrinsic Motivation? Comparing Behaviors Studied in Psychological and Economic Literatures - PMC - NCBI