The answer to the question ‘What motivates more?’ is not a simple one. It depends on several factors. What works for some groups of workers will not be effective with others.
While financial payments are not the only motivating factor for people to work effectively in a business organization, business managers need to consider all of the payment and non-financial methods of motivating staff.
Financial rewards or non-financial rewards?
Here is a breakdown of some key points:
A. Financial rewards
These are all sorts of monetary payments to employees.
- Pros: Tangible, universally desirable, address basic needs and security.
- Cons: Can lose value over time, short-term focus, potential for comparison and competition.
B. Non-financial rewards
These are all sorts of non-monetary payments to employees.
- Pros: Can address intrinsic motivators, foster engagement and satisfaction, often more affordable.
- Cons: Need to be personalized and meaningful, potential for subjectivity and misinterpretation.
Ultimately, the key is to understand what motivates individuals within your specific context and tailor your approach accordingly.
Effectiveness of financial rewards and non-financial rewards
Both financial and non-financial rewards can be motivating, but their effectiveness depends on several factors, including:
- Individual preferences. Some people are strongly motivated by financial rewards, wanting the security and freedom that money brings. Others prioritize intrinsic rewards like recognition, learning, and making a difference.
- Context. Financial rewards may be more motivating in situations where individuals have specific financial needs or goals. Non-financial rewards may be more effective in fostering long-term engagement and satisfaction, especially for knowledge workers or in purpose-driven organizations.
- Type of reward. The specifics of both financial and non-financial rewards matter. A significant bonus might carry more weight than a small raise, while personalized recognition could hold more value than a generic gift card.
- Delivery. How rewards are presented and perceived is crucial. Transparency, fairness, and alignment with personal values can enhance the impact of both types of rewards.
How to balance between financial rewards and non-financial rewards?
The main factors that influence the different degrees of emphasis on pay and non-pay factors include the management style and the corporate culture:
- Style of management. If managers have the attitude that workers are naturally hardworking and can be trusted, then non-monetary payments with less supervision can be adopted. But, if managers have the attitude that workers are naturally lazy and cannot be trusted, then monetary payments linked with results with more supervision can be adopted.
- Culture of the organization. If the culture is to view workers as partners in the business organization, then workers will be given more chances to accept more responsibility and to participate in making decisions. If the culture is to view workers as an object to exploit, then they will not be given any chances to accept responsibility nor participate in making decisions.
As with many important decisions made within a business regarding motivation, so much depends on the attitudes of senior managers as well as the business culture that the firm adopts.
Therefore, business managers need to be flexible about the particular circumstances of their business and adapt the methods to their workforce.
