The huge caveat with the "money can be demotivating" argument - which I feel never gets raised - is how damaging underpaying can be. If you see others being com

The huge caveat with the "money can be demotivating" argument - which I feel never gets raised - is how damaging underpaying can be. If you see others being compensated more than you, for instance, for doing the same... even dogs get resentful: http://www.npr.org/templates/story/story.php?storyId=97944783 http://www.npr.org/templates/story/story.php?storyId=9794478... I also can't be the only person who gets upset when the team works incredibly hard, puts in extra hours, etc, towards some goal - say, keeping the company alive - and the only reward is a "good job team". It's quite possible that a party, a day off, etc, would be as good as a financial bonus. If I feel I am undervalued at my current company, or if I am valued less than others I feel comparable to - that is a much bigger demotivator. Similarly, cash or equity bonuses (especially after hard work, and not as a pre-set bonus triggering on a condition) feel great and help me to feel like the company cares about me.