How do you motivate someone to work? For many the response is quite simple: money. Want more work? Pay more money.

Economists have long instructed us that human beings are rational self-interest maximizers motivated solely by the dollar. The discipline of economics has historically dominated business schools and management research and, it follows, that the fundamental assumption of self-interest maximization is applied to companies. As the economist Milton Friedman famously wrote “the social responsibility of business is to increase its profits.”

“The view that money is the way to motivate someone to work is only half correct.”

The problem with money

However, the view that money is the way to motivate someone to work is only half correct. And it is half terribly, terribly wrong. The research is in and it is clear. For knowledge workers, one must pay enough money to take the issue of money off the table. But beyond that, money is a terrible motivator. In fact, money can demotivate employees as incentive plans often end up encouraging them to think more about money than the work.

Instead, purpose is increasingly recognized as the greatest motivator for employees. Purpose is increasingly demonstrated with new generations of employees who are demanding that the organizations at which they spend their precious time connect to something much bigger.

Finding purpose

At the Berkeley-Haas Center for Responsible Business, in consultation with our students, we have teed up social inclusion and climate change as themes we are working to incorporate across our programming. These themes also represent opportunities for companies to connect their employees with purpose.

For many large, established companies, connecting employees with a sense of purpose is remarkably challenging. This is where a corporate social responsibility (CSR) or sustainability group can serve an important role. CSR and sustainability groups can identify material issues for that company, such as encouraging social inclusion or battling climate change, and bring these issues into the company.

Profits are a bit to the company like oxygen is to the body: Necessary for survival but a pretty lousy thing to live for. Companies that connect their employees to a greater sense of purpose are those that will foster healthier organizations and ultimately realize greater profits.