"Actually I fail to see how "motivate your employees to work harder" necessarily translates into "employees are happier""
Fair criticism. I just think that for people with common sense, more money likely (not necessarily!) translates into a better life and more satisfaction, up to a point.
A larger apartment closer to work for a more relaxing commute, fewer nagging worries about money, chances to enjoy nicer "things", etc. are all minor but real improvements in quality of life that can be enjoyed with a higher salary. Some people are very much motivated by money and some are less so, but unless your staff have genuine addiction problems, more money is likely something they will appreciate.