Advantages of Financial Motivation and Rewards and Recognition Method of Motivation

Academic and Professional
Skills

Table of Contents
INTRODUCTION...........................................................................................................................3
Advantages of financial motivation.................................................................................................3
Two main advantages of financial motivation.............................................................................3
Reason because of which financial motivation work..................................................................4
Reasons because of which employees favour this method..........................................................5
Reasons because of which employers favour this method..........................................................5
Disadvantages of financial motivation............................................................................................5
Disadvantages..............................................................................................................................5
Reason because of which financial motivation sometimes fail...................................................6
Reasons because of which employees reject this method...........................................................7
Reasons because of which employers reject this method............................................................7
Rewards and recognition method of motivation..............................................................................8
Relevant theory along with appropriate example........................................................................8
Why rewards and recognition or non financial motivation is. better than financial motivation. 9
Offering personal enrichment and development programs to employees.......................................9
Theory behind this method........................................................................................................10
Reason because of which it is better than financial motivation.................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
This presentation outlines different methods for employee motivation and what makes
them better than financial motivation. Motivation can be defined as an element that initiate,
guide and maintain goal oriented behaviour of employees. There are several reasons because of
which motivation is highly important as this improves level of efficiency of employees and also
lead to achievement of organisational goals and objectives. Encourage employees to stay and
retain within organisation and reduces employee turnover. Motivated behaviour of employees
leads to increase in productivity and profitability of the employees and employee become
diligent concerned with their performance. Even after these benefits and importance of
motivation to organisation and to employees, few employees become demotivated. There are
several reasons for this and mainly these reasons involve feeling under-valued, lack of or no
development opportunities, poor leadership etc. In present times as demand for technically and
professionally skilled and educated workforce increase, employees are looking for a job where
they can develop themselves and learn, it also has direct influence on their motivation. In case
such employees do not get adequate opportunities to learn and develop, this also become an
element in demotivating employees. Improvement in motivation can lead to improvement in
employee performance and productivity of the organisation. This is also important for retention
of employees as demotivated employees often increase absenteeism and turnover of the
organisation.
Advantages of financial motivation
Financial motivation is one in which employees are given monetary incentives for their
performance above standards.
Two main advantages of financial motivation
Extra efforts tied to monetary incentives is perceived fair by employees- This is one of the most
important advantage of financial motivation. Employees when are paid for their extra
performance or are paid for performance, they consider and perceive as fair (Grynko and et.al.,
2017). This is because increase in their performance is not only beneficial for organisation but is
beneficial for them as well and they are being treated fairly and getting advantage of their efforts.

Decrease in employee turnover and leading to increase employee satisfaction- Employees
when are paid well they are more likely to retain in organisation for longer period of time
compared to those who are not paid well. Fair and high remuneration and monetary incentives is
one of the most important elements of employee satisfaction. Satisfied employee is a great asset
to organisation as they are more likely to get engaged with their job.
Reason because of which financial motivation work
One of the most important reasons that financial motivation works is that every employee
regardless of their needs likes to be paid well. This means that financial motivation gives
employees a sense that their extra efforts are not only for organisation and also are useful and
beneficial for them. In other words, employee may feel that their extra efforts in organisation
have no benefit for them and they will be paid same. Financial motivation ensures that
employees do not feel this way.
Financial motivation is one of the best ways for ensuring effective and higher
performance of employees in work that is of repetitive nature (Jost and et.al., 2017). This means
that employees when do same work every day, after some time their productivity might reduce
but linking monetary incentives with their performance ensures that they are performing
effectively and above standards. For example- Employees who are expected to produce 10 units
of a product a day, are when told to and expected to produce more units, they might get
demotivated or possibility is there that they will not agree with this thought because there is no
benefit for them in producing extra units of product. Contrary to this in a situation employees are
offered that they will be paid extra for each unit they produce above 10 units in a day. This will
motivate them to work hard and produce extra units, this way organisation will be able to utilise
highest potential of the employees.
Another suitable example of this is commission based reward system. In this system employees
are hired for minimum or basic remuneration and further their remuneration is based on clients
they bring to organisation or on the basis of sales that they make. Remuneration when is based
on this criteria employees make their best efforts to ensure that they make higher sales and bring
highest possible clients for the organisation. This is beneficial for both organisation as its sales
get increased and for employees as they receive commission.