Money as a Motivator: 5 Reasons Millennials Prefer Benefits over Money

Money makes the world go round. Or at least that’s how it used to be. In today’s world, there’s a lot more than money that can motivate team members. Employers tend to focus solely on monetary rewards–trying to attract the biggest talent with generous sign-on bonuses or attempting to increase current employee performance with promises of a raise. These tactics simply don’t succeed with today’s workforce. Here’s five reasons why:
1. Raises Aren’t Everything
Think of a raise as a carrot tied to a string at the end of a stick. Now attach this stick to each of your rabbit workers and watch them hop ahead madly trying to catch it. To you, this is motivation. For them, this is futility. In 2016, only 7.9% of employees received promotional raises.1 The promise of a future that never seems to arrive will not motivate your team to work harder. Tangible benefits like travel can be planned and looked forward to with the guarantee that the day of vacation will finally arrive…and most likely, much sooner than their raise.

Another reason raises aren’t everything? Employees are encouraged to fight for the wage they deserve, but the raise they receive might not meet their expectations. With a projected average raise of only 3% in 2018 2, your employees could leave your office disappointed rather than jumping for joy.
2. Bonuses are Soon Spent
Bonuses have long been the savior of companies who believe raises will cost them more in the long run, but handing out a bonus is like offering a piece of candy instead of a nutritious and filling meal. It may excite employees with a “sugar rush” of cash, but these lump sums are soon spent. And probably not on what you think.

Contrary to popular belief, younger generations of workers will not take that cash straight to the bar or spend it all on Amazon. The heavy burden of massive student debts and the bleak outlook for social security and other retirement cushions mean lots of “excess” money is going straight to the bank. While a bonus may seem like a generous benefit to a company owner, money can’t be a motivator for staff if it evaporates as soon as it’s in hand.
3. Extra Pay=Extra Taxes
“Be present” and “live in the moment” are often spouted as sage words of advice (and they are), but without any forward thinking, your employees could find themselves resenting the raise you so generously gave them. Increased money means additional taxes for both you and your employee. A raise could push a worker from one tax bracket into the next and, come April, that person may be in for a surprise if they’ve only concentrated on the here and now of their raise. While it’s true that they will still be netting more by the end of the year (not counting inflation), some employees may not see this as their benefit of choice.
4. Wage Isn’t Status
Wage transparency is a hot topic in big business. Those that advocate for it say it creates a fair playing field for negotiations and increased salary satisfaction. Those who are opposed say it is an invasion of privacy and discourages lower-paid employees from putting in the same work, knowing they are being paid less than those around them.

Traditionally, employees have been discouraged from discussing their salaries and bonuses. Over time, money has become less and less of a card to play in your social status strategy. If one employee can’t brag to another about their pay raise, then it doesn’t have the same power as a motivator. What someone can brag about is the awesome vacation they just took to Aruba. Money simply doesn’t motivate the same way travel benefits can.
5. Things Don’t Matter
Money is a concept originally invented for the purchasing of goods. Millennials and the generations after have decided they don’t want to buy into this system. In a world with planned obsolescence and a consumer culture that says everything is replaceable, material objects simply don’t have the enticing pull they once did. A new pair of shoes will be scuffed and dirty in a few weeks or months and the satisfactory memory of this purchase soon fades.

Instead, workers are favoring experiences over things. In a survey by the popular job website Indeed, 68% of employees said they would be open to receiving benefits over a raise and 34% of respondents cited more holiday time as their top priority.3 Travel, whether it’s to the next town over or a country far away, is preferable to money because travel offers more value than money can hold.

Money is no longer the motivator it’s been in the past. With low average percentages and disparities in what is considered “fair compensation,” workers aren’t relying on raises to increase happiness. Bonuses are eaten up by the many burdens of adulthood before they can be enjoyed. And the value (both real and perceived) of material goods have been eclipsed by the importance of experiences. The next time you consider using money as a motivator, think again.