Yes, employees need monetary compensation so they can meet their personal needs. Once that salary is reached, money is no longer a motivator. In fact, it actually demotivates them. Daniel Pink and Dan Ariely have researched this phenomenon. For a full description of their study and findings read Drive by Daniel Pink and Predictability Irrational by Dan Ariely.
When it comes down to it, the best motivator is happiness. If your employees are happy and excited to come to work, they work hard to drive results then the monetary compensation is just that – compensation. Steve Jobs said it simply, “The only way to do great work is to love what you do.”
Have your employees make a list of things they love and things they loathe. Then figure out how to get them to do more of what they love and less of what they loathe. Maybe one persons loathe is another’s love. Then it will motivate them to come to work happy and excited to do what they love.