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Best Way to Increase Work Motivation Is Through Financial Rewards

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For today’s organizations, the problem of how to effectively motivate staff has become an increasingly important issue. “At one time, money was considered the best employee motivation technique. But today, the use of money as motivation has several strikes against it” (Zani, Rahim, Junos, Samanol, Ahmad, Merican, Saad, and Ahmad, 2011, p331). Money is one of they most common and quickest ways of motivation but not very effective as employees now need more than just money. This essay discusses that financial rewards may not be the best option to motivate employees in an organization. Evidence will be provided to support the argument with along with their advantages and disadvantages. Here motivation will be defined as a stimuli acting on, or within, a person that cause the arousal, direction, and persistence of goal-directed, voluntary-effort. (Buchanan and Huczynski, 2010, p267). Motivation is concerned with what gets some one going to make a choice to act, selecting between alternatives, ad the sustained focus of action. (Buchanan and Huczynski, 2010, p267).

Motivation theory is thus concerned with explaining why and how behavior is activated and sustained, If this understanding can be ascertained, it follows that, in relation to employee motivation, and better-informed performance and rewards management may be undertaken. (Perkins and White, 2008, p50) Motivation is broad concept, which includes preferences for particular outcomes such as straight of effort and persistence. These factors should be understood by a manager in order to motivate employees. According to Lord motivation of workers can lead to accomplishment, job responsibility, recognition and much more, it improves job satisfaction and increase productivity that leads not only to high profits but also a better image of the company (Ciorbagiu-Naon, 2010,p42).

It shows that the company is a place with a good environment and even better work relationships between employers and their employees (Ciorbagiu-Naon, 2010, p42). According to Anda Racsa, motivating employee’s become a lot easier when the organization is well strategized, has a clear set of objectives and realistic deadlines (Ciorbagiu-Naon, 2010, p42). Management should understand and consider employees’ needs and wants before deciding on what tool to use to motivate them.

Motivation is determined by both monetary and non-monetary factors. In Roderic Gray’s (2000) own research he found that incentive payments may motivate people to do more that standard performance but then it become regarded as a part of the normal pay expectation. The possibility of not receiving them comes to be seen as a threat more like a punishment for not doing as well as expected. (Gray, 2004, p21) Whereas non-monetary rewards work in the long run because the encourage workers to be more efficient and productive. ‘Non financial reward is a non cash award given in recognition of high level of accomplishments or performance such as customer care or support to colleagues, which is not dependent on achievement of a pre determined target.’ (Sliverman, 2004, p7). They provide employees with something tangible that they can remember such as a special day or a great meal can enforce much more positive effect, than a sum of money paid into a bank account, as it makes them feel appreciated.

Although non-financial rewards have the word “non cash” defined in it, it does not mean it has no financial value, it simply means that whatever the reward is, it is not just money. There is a wide variety of ways and theories in which non-financial rewards can work in practice. Some for them shall be listed and discussed below. One theory put into practice, by organizations, is the Expectancy theory. This theory, based on the works of Victor Vroom, states that behavior results from a conscious design making process based on expectations or subjective probabilities, that the individuals has about the results of different behaviors leading to performance and to rewards (Buchanan and Huczynski, 2010, p275) Expectation of rewards vary from person to person, for example a person may do a task for self satisfaction, while another might to it to get some from of recognition. The theory puts the idea that individuals will be motivated if the reward obtained is up to their liking and that he or she believes the effort is worth the reward.

At the Wallace Company, employees were asked to work harder, be more efficient and help improve the quality of the firm (Halepota, 2005, p18). This theory assumes that individuals base their behavior on conscious design making toward desired outcome and it explains individual differences unlike content or need theories (Buchanan and Huczynski, 2010, p275). Employees were made aware of the reward and so it kept them motivated and made them more productive and they work harder than before (Halepota, 2005, p16). Herzberg argued that pay was not a motivator. His 2 factor theory is a division of factors that might be linked to intrinsic factors, such as motivating people and job satisfaction, are known as motivators might be linked to extrinsic and contextual (what employee’s already expect from the job) factors are known as hygiene factors (Wright, 2006, p21). Hygiene factors are aspects of work that remove dissatisfaction but do not contribute to motivation and performance (Buchanan and Huczynski, 2010, p280).

An employee in a big organization, without an a proper salary, nor appropriate supervision or working conditions would lead to a negative impact on his or her motivation and would decrease productivity (Halepota, 2005, p18). They must be first met before progression to actual motivation begins. They include pay, working conditions, social status and job security (Buchanan and Huczynski, 2010, p275). Motivators are used to help construct more productive jobs. Say the employee in the big organization was given a difficult task, or more responsibility, this creates confidence and leads to the employee doing his or her very best which impacts a positivism and productivity (Halepota, 2005, p16). They include factors such as achievement, recognition for achievement, meaningful and interesting work, responsibility and advancement (psychologically as well not just promotions) (Marcousé, 2008, p231). Herzberg said, ‘”motivators and hygiene factors are equally important, but for different reasons” (Worthley, MacNabm, Brislin, Ito and Rose, 2009, p1507).

Douglas McGregor said, “The average human being learns, under proper conditions, not only to accept but to seek responsibility” (Marcousé, 2008, p245). Theory y managers believe that employees do enjoy work and put some effort into work, as they want to work. They are creative and so they contribute ideas and they want responsibility, provided there are appropriate rewards, therefore put in a good amount of effort. As a result Theory Y manager is more likely to involve employees in decisions and give them a greater responsibility. Here workers are given more freedom to work in their own way to achieve their goals. An example of th Marcousé is theory would be the Hobert Brothers Company. They follow this democratic way of management, they share profits with their employees, give them responsibility and confidence so employees are loyal and willing to make a proper effort (Halepota, 2005, p18).

As evidence there was a fire that occurred at one of their plants, in 1990, many of their employee worked overtime (12 hours, 7 days a week) to help with the massive cleaning, installing of new equipment and repairs to the building (Halepota, 2005, p18). Some firms follow the Elton Mayo’s human relation’s approach theory. In the 1920’s Elton Mayo conducted a series of experiments in Hawthorne University, where every 2 weeks a new working method was tried on a group of 6 women, before apply any methods, Mayo and his researchers would sit and discuss them thoroughly (Marcousé, 2008, p228).

They included different types of bonus methods, different refreshments, work layout and rest periods (Marcousé, 2008, p228). At the end of the experiment he came up with few conclusions, (1) women prefer freedom and want to take control over their work environment (2) these 6 women began to work as a fully functional team (3) Output and morale is varied to the extend of communication between workers and managers and (4) “Staff is affected by the degree of interest shown in them by managers; the influence of this upon motivation is known as the Hawthorne Effect” (Marcousé, 2008, p229).

Most managers believe that money is the most efficient way to make people, but the question work. “Although money may not be the most important reward for some, it usually is important to most people” (Lawler, 2006, p76). Whether is the form of wages, incentive pay, bonuses, profit shares or any of the other things given to people for performance, money is important as a motivator and as an indication of status. Timothy judge of University of Florida conducted a research that showed a positive correlation between pay level and satisfaction with the job as a whole (Wyld, 2011, p101). Frederic Taylor, the founder of scientific management, is widely recognized as a key figure in the history of management (Wren, 1911, p5). According to him, that employees only responded to money and thus it was the only motivator. He thought that using the carrot approach, being the incentive, or stick approach, being the threat, approach was the only option to deal with employees.

His methods involve: observing the workers at work, recording and timing what they do, singling out the efficient workers and find ways to achieve higher efficiency and productivity, he includes division of labor which breaks down the job and makes them in to simple repetitive tasks so that they can be done better and quicker, he also sets out proper, clarified and easy to understand goals for workers to make sure they understand what is expected from each of them, and came up with a financial reward scheme known as the piece rate which means “being paid of per task or piece of work” (Locke,1987,P14-19). “Scientific management is the basis for much traditional practice, not just in reward but more broadly in management practices” (Wright, 2006, p17). Henry Ford, of the Ford car manufacturing company put Taylor’s scientific management theory to use and as a result he was the world first mass-produced motorcar. Another theory that organizations follow is Maslow’s ideas about hierarchy of needs.

“Hierarchy of needs is what Maslow suggested that individual needs were organized in a hierarchy form, they were categorized in the following 5 levels: physiological needs, to safety needs, to needs for love, affection and belonging, to esteem needs and finally at the need for self-actualization. (Willmott and Knight, 2012, p45) It helps us have a better understand on how human behave and to select appropriate motivational strategies (Halepota, 2005, p17). He said that until one level was not met, people could never satisfy the next (Willmott and Knight, 2012, p45). The first level of the hierarchy needs is physiological needs, which in an organization include pay levels, so if pay levels are not up to workers demand, then according to Maslow the organization cannot work on the rest of the needs.

Motivation is a serious issue manager should focus on. It is not an easy task as manager needs to identify what factors motivate employees the most and they all have different needs and wants. Money may have a impact on employees but instead of getting motivated eventually the increase in salary becomes something that workers expect. This essay states that money is not the best form of motivation different theories that show other ways of motivating employees by using non-financial rewards. Vroom Expectancy theory, Elton Mayo’s Human relations approach, and Herzberg’s Theory Y Management are used to help prove the argument. Managers need to see that motivation is an important issue as it can increase productivity and also increase the organization’s cash flow. In order to do that they need to be concerned with employees feelings and how to best motivate them to make them feel appreciated and motivated.


Buchanan, D.A. and Huczynski, A.A. (2010). Organizational Behaviour, (7th ed.) Great Britain: Pearson Education Limited. Ciorbagiu-Naon, R. (2010). Modalities of non-financial motivation of employees within organizations,
Annals of the University of Petrosani, Vol.10, No.4, pp.41-54. Gray, R. (2004). How People Work, Great Britain: Pearson Education Limited. Halepota, H.A. (2005). Motivational Theories and Their Application in Construction. Cost Engineering, Vol. 47, No. 3, pp.14 -18. Knight, D. and Willmott, H. (2012). Introducing Organizational Behaviour And Management, UK: Cengage Learning Inc. Locke, E.A. (1982). The Ideas of Frederick W. Taylor: An Evaluation, Academy of Management Review, Vol. 7, No.1, pp.14-24. Marcousé, I. (2008). Business Studies for A Level (3rd Ed), London: Copyright Licensing Agency Limited. Perkins, J.S. and White, G. (2008). Employee Reward, London: Chartered Institute of Personnel and Development. Pinto, P.E. (2011). The Influence of Wage on Motivation and Satisfaction, International Business & Economics Research Journal, Vol. 10, No.9, pp. 81-92. Sliverman, M. (2004). Non-Financial Recognition. The Most Effective of Rewards? UK: Institute of Employment Studies. Worthley, R., MacNab, B., Brislin, R., Ito, K., and Rose, E. (2009). Workforce motivation in Japan: an examination of gender differences and management perceptions, The International Journal of Human Resources, Vol.20, No.7, pp. 1503-1520. Wright, A. (2004). Reward Management in Context. London: Chartered Institute of Personnel and Development. Wyld, C.D. (2011). Does More Money Buy More Happiness on the Job?, Academy of Management Perspective, Vol. 25, No.1, pp.101-103. Zani, R.M., Rahim, N.A., Junos, S., Samanol, S., Sabor, S., Ahmad, S.S., Mearican, F.M.I., Saad, S.M. and Ahmad, I.N. (2011). Comparing The Impact of Non-Financial Rewards Towards Organizational Motivation, Interdisciplinary Journal of Contemporary Research In Business, Vol.4, No.4, pp. 328-335.

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