Do we work harder when we're paid hourly?

Employee Motivation 101

The proper motivation can help keep employees from becoming discouraged.
The proper motivation can help keep employees from becoming discouraged.
© ­­­iStockphoto/JenD

There isn't much mystery behind our motivation to work. We seek employment because we need money. But interestingly, once we have a job, money is not necessarily the strongest motivator for working hard. According to research based on organizational theory and management theory, there are many other factors beyond money that influence our decision to finish that report or cut out 45 minutes early.

Job satisfaction plays a crucial role in worker productivity. According to recent survey results from the Families and Work Institute, 54 percent of all U.S. workers are less than fully satisfied with their jobs, and 39 percent are not fully engaged with their work [source: Bond]. A worker who isn't fully engaged is far less likely to put in the extra effort to be as productive as possible.

So why are so many workers dissatisfied with their jobs? It's because they haven't been properly motivated. According to research from the Harvard Business School, most employees are very enthusiastic when they first start a job, but quickly lose motivation after the first six months [source: Sirota]. It's not the employees who are to blame, says Harvard. It's their managers.

According to the researchers, workers have three goals when they look for a satisfying job: equity, achievement and camaraderie [source: Sirota]. First of all, everybody wants to be fairly and equally compensated for their work. That means receiving a fair market price for their labor as well as any benefits and perks that come with the job title.

Secondly, an employee needs to feel a sense of ownership in the success or failure of the business [source: O'Connor]. The worker needs to know that he or she is making a valuable contribution.

A manager can instill this sense of ownership in several ways. He or she can simply make a point of recognizing the employee's achievements, both publicly and privately [source: Boyer]. He or she can improve the employee's sense of camaraderie, team spirit and company pride by directly linking production numbers to profits and rewarding employees for reaching collective goals. The reward doesn't even have to be monetary. It could be an extra day off or a company party.

Labor experts point to Costco as an excellent example of a well-managed and motivated workplace. Costco employees are paid an average hourly wage­ of $15.97, which is 40 percent higher than the average hourly wage at Sam's Club, Costco's closest direct competitor [source: Holmes]. Cost­co hourly workers also receive competitive health insurance coverage, 401(k) accounts and profit-sharing plans. With these perks, Costco is able to attract and retain loyal, top-quality employees who feel ownership of the company's success.

The high job satisfaction of Costco employees translates directly into greater productivity. In 2004, Costco earned $13,647 in operating profit for each employee. Sam's Club earned only $11,039 per employee [source: Holmes].

So back to the question: Do we work harder when we're paid hourly? The answer depends on the workplace environment, the management philosophy, your coworkers and most of all, yourself. A properly motivated worker will work just as hard in a salaried job as an hourly one.

That said, researchers have identified some basic differences in what motivates hourly workers versus salaried workers. We'll take a closer look at these in the next section.