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Non Financial Rewards

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The question as to how to effectively motivate Employees is becoming an increasingly important issue. Despite research that demonstrates that Employees are motivated by more than just pay alone, many Organisations continue to focus primarily on financial rewards as means of incentivising Employees to perform. In considering the use of rewards it is important to bear in mind that pay and other forms of financial reward are not the only means of motivating Employees to perform better.

While Employee pay and benefits are important and setting them at low levels can cause significant issues, research has consistently demonstrated that non-financial rewards can be just as important. While financial rewards are important as a means of providing substantial recognition of effort or contribution, numerous studies have concluded that for those with ‘satisfactory’ salaries, non-financial rewards are more effective than additional salary payments in supporting long-term Employee engagement. Indeed, a recent McKinsey Quarterly survey underlines this theme on ways to more effectively motivate and engage with Employees. Respondents to the survey indicated that non-cash rewards such as praise from an immediate Manager, additional time off, or an opportunity to lead a project were viewed as more effective motivators than the three highest rated financial incentives listed: cash bonuses, increased base pay and stock or stock options.