A long time ago someone explained the value of money to me.
Its not the things you can buy with it, or the prestige or power that goes along with it, they breathed earnestly, its not even the tax brackets you so artfully have to maneuver around.
Huh? I asked, what is it then?
Its the way we keep score
Her point was that unlike most other methods someone's value to a firm can be objectively measured in how much salary they make. Technically this is true: we evaluate jobs (not people) to see what they're 'worth' in the marketplace so in a sense we have a very clear scorecard.
Sometimes I hear HR people rail against money as measure or motivator with long arguements against it: this is naive though. We all need it and we all care about it.
To borrow a line from Its A Wonderful Life “it comes in pretty handy down here bub.”
Recall though that cash is just one portion of total rewards. People can and do value other elements. Knowing how people keep score in your company is an important role of HR. Why do they join your firm and why do they stay? We need to understand this.
In some places I've been money was in the fact the primary, perhaps only, driver of performance. There are some things to be said about that but one thing I'll admit – you're very clear on what everyone wants.
Likewise other firms leverage things besides money in their total reward structure due to business circumstances. This too has its own set of challenges and nuances. Herzberg's two-factor theory holds true though: if salaries are not at least minimally acceptable you'll have a great deal of difficulty attracting and retaining the people you need.
No one ever saved their way to greatness
So there's room on the continuum for you to help influence what your company offers in its total rewards with lots of gradients along the way. Differerent systems call for different rewards. Make choices knowingly and you can refine the culture and attractiveness of your employer to the people you seek.
As for cold hard cash as a scorecard? Many people buy into this and I can't say its right or wrong.
Just know it that's the way you're keeping score you're playing a very specific game.