Question

Explain different financial and non-financial incentives used to motivate employees of a company.

“Human beings cannot be motivated only through monetary incentives, non-monetary incentives are also necessary to motivate them”. Explain any four such non-monetary incentives.

Answer 1

Non-financial incentives refer to those incentives that focus on non-monetary needs of the employees such as the social and psychological needs. The following are some of the non- financial incentives used in the organisations.

1. Position: Rise in status in terms of power, authority, responsibility provides a psychological boost to the employees. For example, a promotion may satisfy the esteem and self actualisation needs of an individual.
2. Organisational Characteristics: Certain characteristics such as employee freedom, recognition of performance, incentives and rewards play an important role in influencing the behaviour of the employees. For example, if the employees get due recognition for their performance, it encourages them to work more efficiently.
3. Work Enrichment: Often, a challenging work environment endowed with greater responsibility and requiring higher knowledge and skill enhances the interest of the employee. It provides the employee prospects for personal growth. Thus, it proves to be a good source of motivation for him.
4. Career Opportunities: If the organisation is endowed with appropriate growth and career opportunities for its employees, it strives then to perform better and thereby climb the professional ladder.
5. Job Security: An employee should have a certain extent of security regarding his association with the organisation. Constant fear of losing the job hampers their efficiency. However, complete security can also result in loss of interest in work.
6. Involvement: If an organisation allows the participation of the employees in the policy and decision making matters, then it instills a feeling of belongingness in them and motivates them to work towards the organisational goals.
7. Employee empowerment: It gives employees more autonomy and influence. The manager motivates subordinates to work hard by emphasizing the importance of their jobs.
8. Employee recognition programmes: Helps to show appreciation for employees' efforts. Employee recognition can take various forms, such as recognizing good performance with a certificate or prize, highlighting achievements on the corporate notice board or news letter, and rewarding suggestions.