Nick Clegg laid down the gauntlet to MPs by saying he would refuse a recession-busting £10,000 pay rise. (Photo: Reuters)
Nick Clegg laid down the gauntlet to MPs by saying he would refuse a recession-busting £10,000 pay rise. (Photo: Reuters)

As the furore over a planned hike in politicians' wages threatens to engulf the House of Commons, we have found that an increase in salary is actually not a good motivator.

Indeed, research of more than 110,000 people, carried out by People Insight, said money has less of an effect on someone's level of engagement than having a challenging job, autonomy and prestige.

A hike in salary, particularly during tough times for most British workers, would cause widespread resentment and disengagement.

This attempt by MPs to award themselves a big increase in salary 'because they're worth it' is a myth, propagated by the cosy club of senior executives in global corporations, who believe that in order to compete for top talent they have to pay big money.

But even if we put the morality of this to one side, the fact that the man on the street has to cope with the cost of living going up and his own salary flat-lining, money is a poor motivator.

Quite simply, it has less of an effect on someone's level of engagement and commitment than, for example, having a challenging job.

All of which come by the bucket load, you would imagine, in the seat of power.

So, the argument that in order to attract and motivate the best workforce requires that we pay them the most, entirely misses the motivational point.

Worse still, it may attract the wrong sort of person to these positions.

Perhaps that is why we have seen the sort of shallow morals and short-termism in play in organisations that were once seen as the rocks of principled, honest endeavour.

Money Doesn't Equate to Value

There are countless ways in which MPs could feel more valued without needing to increase their bank balance.

They should follow the rules of good business and look at the results of a far-reaching survey into staff habits which People Insight carried out earlier this year.

MPs should also look at how other businesses motivate staff when they know a pay rise is off the agenda.

Our survey has shown that giving staff verbal praise can be one of the biggest motivational uplifts as well as giving people freedom to tackle the task and enabling them to fulfil their career aspirations.

Of course, across Britain too many bosses fail these tests - hiding behind emails, failing to engage with staff on the shop floor and all too often slipping into a 'one rule for us, one rule for them' mentality.

Indeed, surveys from over 110,000 workers showed just 49% of employees believed their managers rewarded success, while over a quarter [26%] of respondents said managers didn't identify training and development needs.

Worse still, bosses themselves were completely out of touch with how they were perceived by staff.

Eight out of 10 managers think their team is satisfied with their management skills, but only 58% of team members agree.

A massive 91% of UK managers believe that they always or sometimes spend time coaching their team, but only 40% of UK employees agree.

In times of austerity where many firms are looking to tighten belts rather than open the chequebook it's important that everyone realises the positive impact of engagement.

MP Pay Rise: Worth it? How Much Politicians are Paid in Salary and Expenses

Tom Debenham is the managing director at People Insight.

People Insight was formed in 1999 and has worked with clients across all sectors of UK industry, including Virgin, the BBC, Homeserve, Renault F1, and Premier Foods.