Are Higher Salaries the Best Incentives for Employees?

Motivated and happy employees are more productive, committed, and loyal than their dissatisfied and unhappy counterparts. There are several incentives to motivate employees extrinsically and intrinsically. Monetary incentives such as higher salaries are thought to motivate workers more than other forms of incentives but research shows otherwise (Carpenter & Dolifka, 2017). According to Kahneman & Deaton (2011), emotional well-being and motivation increases with increase in salary but remains constant after reaching $75,000 per year. As such, higher salaries are not the best incentives for workers. Based on the Abraham Maslow’s hierarchy of needs, satisfaction of the employees’ basic, psychological, and self-fulfillment needs is the best strategy to motivate and make workers happy.

Adequate fulfillment of the basic needs through provision of food, shelter, and social security motivates employees more than higher salaries. Satisfying biological and physiological needs adequately motivates employees intrinsically because the employer cares for their welfare (Maslow, 2019). Organizations can motivate its employees by provision of free meals and ideal working environment that makes employees comfortable. Also, employers can motivate employees by through a guaranteed job security, retirement packages, life and medical insurance.

Moreover, employees can also be motivated through praise, recognition, and creation of a positive social environment at work which helps them fulfill love and belonging needs. Praising an employee for good performance boots an employees’ sense of self-esteem and shows that their effort is recognized and appreciated by the employer (Maslow, 2019). A positive work culture that encourages job autonomy and allows establishment of warm and meaningful interpersonal relationships makes employees happy and inspires team spirit. Strong social support at work motivates employees and reduces the risk of turnover. Appreciating employees who perform well and accommodating people from diverse socio-cultural backgrounds boosts intrinsic motivation among the employees because they feel being a crucial part of the company.

Additionally, facilitating self-fulfillment needs by creating a room for personal and professional growth can motivate employees strongly. This could involve providing employees with training and development programs that help employees to actualize their dreams and find meaning in their work. According to Achor et al. (2018), 90% of Americans are more willing to trade-off a 23% of their lifetime earnings for a meaningful job that aligns with their values and dreams. Also, 69% of employees who find work more meaningful are lee likely to quit jobs within six months. Thus, an organization can motivate employees through training and development programs that help them to pursue and actualize their dreams.

In conclusion, satisfying employees’ physiological, psychological, and self-actualization needs is the best strategy to motivate and make employees happy since it inspires both intrinsic and extrinsic motivation. Unlike the higher salaries’ incentives, applying the Maslow’s hierarchy of needs in the workplace is better because it treats employees are human beings with feelings, feelings, and thoughts rather than machines that can be exploited to do anything. This motivational strategy adopts a humanistic perspective which appeals to many employees.


Achor, S., Reece, A., Kellerman, G. R., & Robichaux, A. (2018). 9 out of 10 people are willing

to earn less money to do more-meaningful work. Harvard Business Review96(6), 82-89.

Carpenter, J., & Dolifka, D. (2017). Exploitation aversion: When financial incentives fail to

motivate agents. Journal of Economic Psychology61, 213-224.

Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not emotional

well-being. Proceedings of the National Academy of Sciences107(38), 16489-16493.

Maslow, A. H. (2019). A theory of human motivation. General Press.