Financial & Non-Financial Methods of Motivation

• Financial methods of motivation

  • Support the ideas of Taylor and Taylor's Scientific Management as well as Maslow at basic needs (physiological, safety, security)
• Financial methods of motivation

  • Piece rate: Pay according to the output that employees produce
  • Commission: Pay according to the number of sales made
  • Salary schemes: Sacrifice a small percentage of pay for benefits like childcare, pension contributions, company car
  • PRP (Performance Related Pay): Pay rise if targets are met or exceeded
• Piece rate


  Leads to precise alignment between output and pay, potentially more productivity but also more rush or shortcuts in production process, which could lead to more defects or worsening quality
• Commission

  Leads to alignment from sales to pay, but may result in aggressive sales tactics and team dynamic issues
• Salary schemes


  Partially subsidized benefits to increase employee retention and loyalty, but comes at the cost of administering the scheme
• PRP (Performance Related Pay)


  Results in a pay rise if targets are met or exceeded, but may be difficult to quantify targets in some organizations
• Non-financial methods of motivation


  • Support the ideas of Herzberg (pay as a hygiene factor) and Maslow at higher needs (social, esteem, self-actualization)
• Non-financial methods of motivation

  • Empowerment: Providing autonomy, resources, and support for employees to take control of their work
  • Teamwork: Good team spirit and opportunities for growth, development, and recognition
  • Flexible working: Giving employees control over where, how, and when they work
  • Job enrichment: Making jobs more interesting by giving new tasks, more decision-making, and training
  • Job rotation: Assigning employees to different departments, functional areas, or products for a diverse skill set and strategic oversight
• Empowerment


  Leads to more productivity and innovation, but effectiveness depends on the organizational structure and culture
• Teamwork


  Motivates if managed well with opportunities for growth and recognition, but can fail if managed poorly
• Flexible working


  Gives employees more control over work, including remote working, job sharing, part-time work, or zero hours contracts
• Job enrichment


  Increases job satisfaction and motivation through more interesting tasks, decision-making, and development opportunities
• Job rotation


  Provides employees with diverse skill sets and strategic oversight, potentially reducing recruitment costs in the long term