January 16, 2008

Money or Respect?

In the opening Chapter of Cowen’s book he clearly states that economics is a subject dealing with incentives, not just money. I was having a little trouble thinking of a topic for this highlight, until my fiancĂ© said “economics just deals with money, right?” In his introduction Cowen claims that economics is not all about money, because money cannot prove to be an adequate incentive for all things.

In the beginning of the chapter entitled How to Control the World, the Basics Cowen highlights an example when "Economist Colon Camerer took a poll at the Davos World Economic Forum, which plays host to many of the world’s business titans and idea gurus. When asked what makes people tick, the responding participants cited “recognition and respect” as the number-one motivating factor in the workplace. “Achievement and accomplishment” came in second." (Cowen 11)

Knowing what makes people tick can be a very important thing if you are in charge of people in the workplace. Recently, I took classes in leadership communication and resume writing. Both of my teachers said that as we advance in our careers, earning recognition and respect for ourselves will eventually be more important to us than base salary, bonuses, etc.

After Cowen tells us of the, previously quoted, poll from the Davos World Economic Forum he states that economies without decent monetary rewards do not perform well at all. In terms of applying this to real life, the whole recognition and respect vs. money as the best workplace motivator truly depends on a worker’s financial situation. For example, I had a friend at work who everyone considered the best team member in his department. He was loved by all of the bosses and team members. Then a new employee was hired, trained by my friend, and earned a higher wage than he did. My friend asked HR for a raise, without mentioning the new employee, or their salary. HR declined citing they do not offer raises based on job performance or experience (doesn’t that defeat the purpose of a raise?).

As I mentioned earlier, Cowen said that economies with poor monetary rewards perform poorly. In terms of my friend, after this situation came about the quality of his work declined, and he has since found a new job. Even though he had earned much respect, and received much recognition, the poor monetary rewards associated with his job led him to quit.

My take on this topic is that recognition and respect tie in with monetary rewards in that one leads to another. For example, if you are a top executive, and everyone knows and respects you, you will be able to change jobs very easily, and quite possibly earn a higher salary. However, if you have not received much recognition and not earned much respect throughout your career, you will, most likely, not make as much as the respected, and well-known, person. In a nutshell, respect and recognition, without even the slightest possibility of a monetary reward, will not do much in terms of motivating most people (excluding the rich, who don’t need money).

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