Money As A Motivator

Practically everyone agrees that money is a prime motivator. But part of the success of money as a motivator depends on how it is used to motivate.

Money is most effective when the recipient can somehow control the reward. Commissions are a good example of this. This is why raises not based upon performance are not good motivators. If part of an employee's reward is based on how effectively they perform then they can be motivated to increase their performance. However, this does not work for everyone, which is why you do need to know more than one method of motivating people.

Before you can do anything else, you must obtain and use accurate information. If part of an employee's monetary reward depends on his/her productivity or company/project profitability you must be able to access correct information and use it correctly in the determination of this reward.

Let's say that for each project the company sets a budget number for the costs to it. Now let's assume that the project manager's bonus is a percentage of the difference between the target numbers and what the job actually costs. The project manager has a real stake in completing the job on time and on budget. (As discussed in the Scheduling section below, reduction in time will of itself result in lower costs.)

To be effective, this system must yield accurate job costing and the effective use of the reports that are available. The reports must be easy to read and "provable" so that everyone will have confidence in their use. The use of reports like the job summary report and the job cost journal can help everyone see what costs are included in the total job costs and detail of each cost if certain items need to be examined.