Employee Motivation: Financial and Non-

financial Techniques of Staff Motivation

Regardless of which theory of employee motivation is followed, the research studies on
motivation conclude that interesting work, appreciation, pay, good working conditions, and job
security are important factors in helping to motivate.

Financial/Incentives Techniques of Motivation:

Financial techniques refer to monetary rewards. Incentives are nothing but the inducements
provided to employees in order to motivate them. There should be direct relationship between
efforts and rewards, financial reward should be substantial in value and must be in parity with
others. Under -paying staff sends the message that your firm doesn’t value their work. Money
is not a prime motivator but this should not be regarded as a signal to reward employees poorly
or unfairly.

The financial incentives include:

1. Pay and Allowances:

It includes basic pay, grade pay, and dearness allowance; travelling allowance, pay increments,
etc. Good pay and allowances help the organization to retain and attract capable persons.
However, good pay and allowances need not motivate all the people, especially who are
enjoying security of job in government organizations and those for whom corruption is a way
of life. Some of the other issues are associated with bad attitudes, grievances, absenteeism,
turnover, poor organizational citizenship, and adverse effect on employees’ mental and physical
health.

2. Incentive Pay:

Incentive pay plans are meant to increase output, which can be measured quantitatively. For
incentive plan targets, the employees must have confidence that they can achieve the targets.

3. Gain Sharing:

It is a reward system in which team members earn bonus for increasing productivity or reduce
wastages. To illustrate, if the wastage is reduced from 5% to less the benefits may be shared
equally with the team.

4. Profit Sharing:

It means sharing of profits with the employees by way of distribution of bonus. Profit sharing
plan has its shortcomings – one, that it has become a regular feature in government departments
irrespective of performance and two, it may have no relation with individual efforts.

5. Stock Options:

Many companies use employee stock options plans to compensate, retain, and attract
employees. These plans are contracts between a company and its employees that give
employees the right to buy a specific number of the company’s shares at a fixed price within a
certain period of time. Employees who are granted stock options hope to profit by exercising
their options at a higher price than when they were granted. In India, stock options have
primarily been used as a retention tool for a more selective group of employees.

6. Retirement Benefits:

It includes the accumulated provident fund, gratuity, leave encashment and pension. The
provision of terminal benefits provides assurance to employees during the service for their
future

Non-financial Incentives/Techniques:

Non-financial incentives do not involve money payments. These are also important in
motivating employees as they bring in psychological and emotional satisfaction to them. These
include so many techniques. People do work for money-but they work even more for meaning
in their lives. In fact, they work to have fun.

Some of the important non-financial incentives include:

1. Job security:

Nothing can motivate a worker, appointed temporarily, better than provision of job security.
Even if a temporary worker puts in greater efforts, lack of job security will always pose a threat.
If such a worker is given job security, he will be more committed to the organization.

2. Challenging work:

Workers, who are dynamic in nature, do not show preference for routine jobs. They are always
ready to accept challenging assignments, challenge can be brought through mentoring, job
redesigning – job enlargement and job enrichment. Understand the capabilities of every
individual in the organization and accordingly assign him work.

3. Recognition:

It is important that the employer recognizes hard work. Even a word of appreciation from him
would motivate the employees to maintain the same level of performance or do even better.
Employees ranked a personal ‘thank you’ as the most sought after form of recognition, followed
by a handwritten note of appreciation from the boss.

4. Better job Titles:

Job titles do matter. Employees do show preference for certain designations. A salesman, for
example, would like to be designated as a sales executive and a sweeper to be Sanitary
Inspector.

5. Opportunities for Advancement:

There should never be a stagnation point for any employee during the prime time of his career.
The employer must always provide opportunities for his employees to perform well and move
up in the hierarchy.
6. Empowerment:

To stimulate an employee is his involvement in certain crucial decisions. For example, if the
management decides to buy a new machinery for the factory, the workers’ viewpoints may be
secured before making the final decision. The management should avoid unilateral decisions
on such matters.

7. Competition:

The management can encourage healthy competition among the employees. This would,
certainly, motivate them to prove their capabilities. The management can also rank the
employees according to performance. Such of those employees who have performed very well
may be given merit certificates.

8. Job Rotation:

By job rotation we mean that the employees will be exposed to different kinds of job. This
certainly would break the monotony of employees. For example, in a bank an employee may
work in the Savings Bank Section for sometime after which he may be posted to the cash
section. Such a change not only motivates the employees to perform well but also prepares him
to be versatile.

9. Lead by Example — be passionate and energetic:

Leaders should demonstrate the attitudes, values, actions, and mindsets that they want among
their staff. Leaders are always considered as role models.

10. Encourage the use of humour and creativity:

Incorporating humour into the workplace can alleviate stress and create a more positive
environment for everyone. Strategies to enhance humour include having a daily cartoon or joke
sent to all staff via e-mail, encouraging laughter, finding fun in events that did not turn out as
planned or expected etc.

11. Treat your people as human beings – neither inferior, nor superior:

Show trust and respect, motivate them for creativity, create a ‘safe-to-risk environment’, keep
them informed of relevant developments inside the organisation, mistakes be treated as learning
tools instead of blaming them, act as an advocate for their employees and be a visible champion
for them, provide resources and support required by staff to complete their jobs, promote and
provide two-way feedback, address stress and burnout, and implement work/life balance
initiatives.