ORGANIZATIONAL BEHAVIOUR

ESSAY WRITING

MOTIVATING PEOPLE- BEYOND MONETARY COMPENSATION

SUBMITTED BY
NAME: NANDINI SUREKA

ROLL NO.: 1982057

BRANCH: B.B.A. LLB

SECTION: A

SESSION: 2020-2021(3rd Semester)

SUBMITTED TO
MR. AMARENDRA PATTNAIK

NON-MONETARY INCENTIVES TO MOTIVATE EMPLOYEES

The people form the core of the organization and contribute effectively and efficiently towards the
successful and smooth functioning of it. Their behaviour, attitude and interest at the workplace is the
basis for their contribution and which must be taken care of by both the employee and the employer.
Their performance creates a positive work environment in the firm and helps the employer to measure
their performance and set team trends in the organisation.

But what happens if the employee is not induced or inspired to work hard and earn profits for the
firm? Here, the management steps into the role of a leader and motivates and directs the flow of work
in the organization. The employer gives the employee various reasons to work and then act in a
particular manner. This encourages the employee to give their best performance and help in reaching
organizational goals.

Here, the motive is the desire, needs and wants of the employee and motivation is the process of
stimulating people to actions to accomplish the goals. So, here the employer figures out what ticks the
employee and then align their personal and executive goals with their role and duty in the
organization. This gives the subordinate a sense of acceptance and recognition of their needs in the
organization.

One of the most common and important motivator is incentive schemes. It is a plan to motivate
individual or team performance. It mainly includes monetary rewards, i.e. increased salary, bonuses,
etc. But, nowadays the concept of non-monetary compensation has also gained importance. Statistics
have also shown that nowadays the employees are more satisfied and motivated with the non-
monetary schemes rather than monetary schemes due to the increased need of recognition and respect
in the organisation.

Financial incentives are the monetary benefits which are offered the employees to encourage
behaviour or actions which otherwise would not take place. Some of the financial incentives are pay
and allowances (includes salary, dearness allowance and travelling allowance), productivity linked
wage incentives (involves amount based on actual output against the predetermined targets), bonus
(amount that is given over and above the normal salary), profit sharing (providing them with the share
of profits), etc.

There are no limits to the types of financial incentives which are still popular today but nothing beats
the opportunity to gain non-financial incentives i.e. which goes beyond monetary compensation.
Every employee certainly appreciates more money, but money does not buy happiness, nor does it
buy engagement and loyalty. Non-financial incentives provide those things to the employees which
money can’t buy. These types of schemes are not part of any pay policy. Often, it is seen that
employees are not appreciated for their hard work and many circumstances in the organisation creates
employee disengagement like unsuitable working conditions, unappreciative superior, increasing
demands, etc. In order to increase the overall performance of the employee there should be a cordial
relationship between the superior and the subordinate.

In a 2009 survey conducted by McKinsey & Company, non-financial incentives were rated as more
powerful motivators than financial incentives. The top three non-financial incentives were praise and
commendation from immediate manager, attention from leaders, and opportunities to lead projects or
task forces. Here, the main focus is praise and corroboration from the superior.

Some of the most common and required non-financial incentives are the following. One of the most
important one is status. It refers to the position in the hierarchy of the organizational chart. The status
of the employee in an organisation depends upon the recognition, authority, responsibility, pay scale
and the perquisites. This incentive satisfies the self-esteem and psychological needs of the employee.
Next is the career advancement opportunity where the skills of the employee can be improved through
various programmes in the organisation and this can further help in continuous promotions within the
firm, which thereby motivates the employee to perform better. Then job enrichment is very important
where the work is designed in such a manner which involves high level of knowledge and skill, more
authority and more opportunities for growth. When the work is itself motivating, it motivates to
person to do better.

Job security is also an important non-financial incentive. This provides the employee with a sense of
stability and certainty. They are not worried about their future as it is very certain and hence work
with more enthusiasm. Employee participation involves the employee in the decision making process
of some of the issues which concern them. They feel a sense of belongingness and feel motivated as
their words are heard. Employee recognition programmes are conducted by various organisations
where employee’s work is acknowledged and valued. This includes having best performer of the
month board in the firm, giving them rewards, telling them to wear a batch stating ‘Star employee’,
etc.

Hence, money is not the only motivator but just a part of it. Employee motivation can be solely
judged on the basis of their level of satisfaction and not only from the point of view of their pay scale
but from the view of their aspect of contentment i.e. respect, recognition and authority. There should
be meeting of minds between the employer and the employee, so that both of their needs can be
satisfied. Once, both of them take care of each other’s need, organizational goal will be achieved
efficiently and effectively. Hence, while planning the policies of an organisation, both financial and
non-financial incentives should be given equal importance.