How Important Is Money As An Incentive To Motivate Employees In Higher Education Sector? Literature Review

This paper studies the influence money has on motivating the work force which takes part on both dull and creative tasks. Through a review of the most important findings on the subject, economists’ and psychologists’ theories are presented and discussed. The paper shows how, notwithstanding their high attention received from the business environment in the past, the principal-agent and the price effect theories are being replaced lately with the self determination, psychological contract and reinforcement theories in the configuration process of work incentives. Specific advantages and disadvantages of the use of financial motivators for increasing work performance are further examined and a clear example of how money and more specifically their perception affects the employees’ motivation is given. The results of the study conclude that money has an important role as a hygienic factor in the work environment but they do not represent a panacea for inducing high work motivation and are not enough for assuring the overall success, whether that we are talking about repetitive or creative activities. The late ones are exemplified by the tasks specific to the higher education sector.