Team motivation: Why money alone is not enough

Reading time: approx. 6–8 minutes

Imagine this: A team is sitting in a meeting room. The bonus is mentioned – "If we increase our figures by 10% this quarter, everyone will receive a bonus of X euros." But what happens next? Performance might increase in the short term, but in the long run, motivation wanes, eyes glance at the clock, and morale plummets. Why? Quite simply: Money makes a difference – but not sustainably.

Team motivation requires more than just monetary incentives. And this is a crucial factor, especially in the context of "Mental Health at Work": When employees are intrinsically motivated, when they feel they are part of something meaningful, they go to work with significantly more energy, commitment, and well-being.

In the following, I will explain in more detail why money alone is not enough, what scientific findings underlie this thesis – and how managers can use systemically effective levers to ensure that teams work in a motivated, resilient and healthy manner.

Why money is not the "ironclad motivator"

1. The limits of extrinsic motivation

Classic works in organizational and motivational research point out that money is considered a hygiene factor (according to Herzberg ) – it can prevent dissatisfaction, but it is not the primary factor in promoting satisfaction or engagement. In summary, it is stated that: “Hygiene factors (e.g., salary, working conditions) prevent dissatisfaction; motivational factors (e.g., recognition, development, meaning), on the other hand, promote engagement.”

The so-called Motivation Crowding Theory also states that external incentives can undermine intrinsic motivation (“crowding out”) — for example, when employees feel they are doing their work primarily for the money rather than because they see meaning in it.

A vivid example: In one study , participants were paid to perform specific physical exercises. However, as soon as the focus shifted to the reward, performance decreased – because the enjoyment/meaning was gone.

Conclusion: Money can have a short-term effect – in the long term, it is not enough to generate sustainable motivation within the team.

2. Team motivation requires more: belonging, purpose & autonomy

Research shows that certain factors are important in team contexts:

• Belonging / social connection:

  A team that perceives itself as a subgroup where members know and value each other performs better. One study , for example, found that "peer pressure and team spirit motivate employees more than money"—employees didn't want to disappoint the team, and the social bond was stronger than the bonus.

• Autonomy & Competence:

  According to self-determination theory (Deci & Ryan), three basic needs are central: autonomy, competence, and relatedness. If, for example, autonomy is suppressed (e.g., strict guidelines without choices), motivation decreases, even if the financial situation is adequate.

• Meaningfulness:

  Employees want to feel that their work makes a difference – not just for the company, but for colleagues, customers, or a larger mission. A financial bonus doesn't replace that sense of purpose .

3. Money can help – but with limitations.

Of course: Salary is still an important basic expectation.

A study by Ludwig-Maximilians-University Munich showed that teams with the prospect of a financial bonus performed significantly better.

However, this study also found that the bonus was most effective when it accompanied organizational changes (e.g., a clearer distribution of roles). Money alone – without context – therefore does not seem to be enough.

Conclusion: Money can be part of a motivational mix, but it is not the most important factor for long-term team motivation.

What does this mean specifically for team leadership – three levers

1. Strengthening social bonds and team cohesion

According to research, teams in which employees know each other, help each other and appreciate each other show higher motivation.

Tips:

• Regular meeting rituals (e.g., team check-ins, informal discussion rounds) – not just fun events, but specifically promoting encounters and exchange.

• Develop shared goals : What unites us? What contribution do we make together? When clarity emerges about the "we-added value," a sense of belonging grows.

• Cultivate collegial appreciation : Everyone looks around to see who they are grateful to – public “thank you” strengthens community.

2. Autonomy & competence enable

Motivation grows when employees feel: "I can have a say, I can help shape things" and "I am good at what I do".

Tips:

• Clearly defined tasks – but freedom in the “how”.

• Regular development dialogues : Where do I want to go? Which skills do I want to strengthen? Investing in further training shows appreciation.

• Cultivate tolerance for failure : If employees are afraid of failing, this inhibits the learning and motivation process.

3. Making meaning and impact visible

When people see "what it's all about," their intrinsic motivation increases massively.

Tips:

• Making successes transparent : What impact does our work have on customers, colleagues, and society?

• Keep making the “ big why ” visible – not as a slogan, but in everyday life: “Thanks to you we have achieved …” or “Our solution helps …”.

• Promote the application of projects : Teams especially want to see: "What is becoming of my work." Visibility creates meaning.

Conclusion:

Money is a necessary element – but not a sufficient lever for long-term team motivation. Those who want consistently high-performing, engaged, and psychologically healthy teams must prioritize social cohesion , autonomy and skills development, as well as a clear sense of purpose.

As a leader, this means: moving away from a purely bonus-oriented mindset and towards designing work environments that address people as human beings.

If you would like to raise awareness among your leadership team about how to achieve team motivation in the digital and hybrid age, then let's talk.

Together we will unlock the levers that will enable your teams to work better and, above all, with greater motivation.

Let's get in Touch!

💭 Reflection questions to take away:

• When was the last time I experienced my team really wanting to "burn" – and what was different then compared to usual?

• How much autonomy and creative freedom do my employees currently have – and where could I consciously build trust?

• Can my team clearly articulate why our work makes a difference – and how do I make this purpose visible in everyday life?

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