MGT200 Organisational Behaviour: Monetary Motivation Techniques

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MGT200 - ORGANISATIONAL
BEHAVIOUR
ASSIGNMENT 2
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Table of Contents
Pros of monetary motivation techniques.....................................................................4
Cons of monetary motivation techniques....................................................................5
Recommendations......................................................................................................6
Conclusion.................................................................................................................. 7
References..................................................................................................................8
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"Money and other financial rewards are a fundamental part of the employment
relationship and can be used effectively in motivating employees. Discuss the
pros and cons of this argument."
Employees are the most important element behind the success of an organisation.
Building a sound relationship with the employees of the organisation is the basic duty
of managers of an organisational (Dobre, 2013). The managers of the organisation
try to undertake several activities with the help of which they can motivate the
potential employees of their organisation. Motivating the employees is essential for
the growth and success of the organisation. The motivated employees of the
organisation work with more enthusiasm and this will in turn help in enhancing the
productivity of the organisation. The motivation of employees helps the managers to
accomplish the goals of the organisation (Eungswan and Chantuk, 2016). This will
help the organisation in enhancing its potential and productivity. Motivated
employees coordinate with the managers effectively and try to fulfil the requirements
of the managers.
There are several ways in which the employees of the organisation can be
motivated. Both monetary and non-monetary methods can be used by the managers
to motivate their employees. Both of these methods have their advantages and
limitations. In this era, employees are more attracted towards the monetary
motivation technique. Using financial resources for motivating the employees can
help the organisation in fulfilling the interest of employees. This can help the
organisation in persuading the employees to work with more enthusiasm in the
organisation (Dobre, 2013).
With the help of financial resources, the managers will be able to provide incentives
to their employees. Incentives are a type of reward that can be used by the
organisation to deviate the actions of the workforce towards the organisational goals.
This is one of the most effective policies that can help the organisation in fulfilling its
primary objectives, i.e., profit maximisation. It has been proven with the help of
several researches that monetary motivation has helped the organisation in
maximizing the level of its profits (Uzonna, 2013).
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Monetary methods of motivation help the organisation in building a healthy
relationship with the employees of the organisation. This will help in satisfying the
employees with the type of task they are performing in the organisation. In the
absence of monetary benefits, the employees can feel unsatisfied and irritated. They
can lose interest in performing their activities effectively. This can hamper the
efficiency and productivity of the organisation (Dobre, 2013). Every activity of the
organisation is aligned with both advantages and disadvantages. Similarly, the
process of monetary motivation is also aligned with both positive and negative
factors.
Pros of monetary motivation techniques
Monetary motivation or providing incentives and bonus is one of the simplest ways
motivating the employees of the organisation and persuading them to fulfil the goals
of the organisation (Kvaloy & Schottner, 2015). This technique helps to generate a
feeling of satisfaction among the employees. The employees of the organisation can
work with more punctuality and dedication in the presence of monetary motivation.
There are several techniques in which the organisation can provide monetary
benefits to their employees like incentives, bonus, piece rates, pay raise, profit
sharing and so forth (Kvaloy & Schottner, 2015). All of these methods help in
enhancing employee retention rate in the organisation. This likewise helps in
boosting the morale of the employees working in the organisation.
With the help of incentives and other monetary motivation methods, the managers
can fulfil the short term objectives of the organisation. These programs help in
resolving the issues from the organisation and help in establishing a healthy
environment in the organisation. This technique helps in solving the monetary
issues of the employees and thus motivates them to work with more enthusiasm in
the organisation (Kvaloy, Nieken & Schottner, 2015).
With the help of this system, the managers will be able to pay extra to the employees
who are working with honesty and integrity in the organisation. The efforts of
employees can be praised by the managers with the help of these techniques. With
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the help of this technique, all the employees of the organisation try to perform their
tasks effectively to get bonus or incentives (Shujaat and Alam, 2013).
In comparison to non-monetary motivation technique, this type of motivation is more
attractive and effective from the employees of the organisation (Shujaat and Alam,
2013).
Cons of monetary motivation techniques
Along with several advantages, the monetary form of motivation techniques has
several limitations too. The primary limitation of this activity is that it enhances the
cost of the organisation. For paying additional benefits to the employees other
than basic salaries, the organisation has to make use of additional financial
resources which sometimes hampers the sales of the organisation in the long run
(Hamel, 2019).
In the long run, employees start thinking incentives as their entitlement or their right
rather than a factor of motivation. This kills the motive of incentive policy of the
company and affects the efficiency of the firm (Hamel, 2019). Aside to this, it is
extremely essential for the company to plan and have control over its incentive
policy. Otherwise, the respective policy can prove de-motivating for several
employees. Sometimes the incentive policies do not work as they are intended to.
For instance, if an employee loses the opportunity of getting extra money just from a
small margin than it can result in de-motivating them, rather than being motivated.
In some cases, the process of monetary motivation can causes clashes and issues
in the organisation. To get incentivised the employees tend to have competition with
their colleagues. This affects the environment of the organisation negatively and
likewise hampers productivity. In short run, the process of giving incentive and bonus
helps in enhancing the performance of the employees, but in the long run, this
process can lead to overburdening the employees and can negatively affect their
productivity. The overburden of work can affect the health and mental status of the
employees working in the organisation. This is essential to control the activity of
monetary motivation in the long run to maintain its efficiency (Shchetinina et. al.,
2018).
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Aside to this a lot of time and cost is consumed in undertaking the process of
providing monetary benefits to the employees of the organisation. Hence it can be
said that the process of monetary motivation is aligned with both positive and
negative factors, so it is essential for the organisation to frame strategies in order to
maintain its efficiency in the long run (Reddy, 2016).
Recommendations
Based on the above information, it can be evaluated that providing monetary
motivation to the employees is a critical process. It helps in fulfilling the objectives of
the organisation in the short run. But in the long run, it can hamper the productivity
and proficiency of the organisation (Hamel, 2019). For resolving this issue, the
managers can try to frame strategies before providing monetary benefits to the
employees. The managers should analyse the future issues must undertake
activities accordingly. Aside to this, the manager should try to make use of non-
monetary motivation techniques along with monetary motivation (Miller, 2015).
The managers can delegate authorities to the subordinates to motivate them. This
will likewise help in boosting the morals of the subordinates and helps the
organisation in fulfilling its objectives. Appreciation is another tool for motivation that
can be used by the organisation to motivate the employees of the organisation.
Aside to this, the managers can try to interact effectively with the employees of the
organisation; this will likewise help in motivating them (Rajhans, 2012).
It is very important for the organisation to make use of both monetary and non-
monetary medium of motivating the employees. This will help the organisation in
minimising the risk associated with monetary motivation techniques and promotes
the growth of the organisation (Wynter-Palmer, 2012).
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Conclusion
The assignment is based on the concept of monetary benefits provided by the
organisation to motivate the workforce of an enterprise. With the help of this
assignment, it can be made clearer that it is extremely essential to motivate the
employees. This will help the organisation in enhancing its potential and productivity.
Motivated employees work with more enthusiasm and dedication in the enterprise.
The assignment likewise helps in evaluating the negative and positive factors
associated with monetary motivation techniques. With the help of the assignment, it
can be evaluated that it is essential to control the process of providing incentives and
bonus in the long run. The benefits of incentives can be observed in the short run,
but in the long run, these pros can be turned in cons and can kill the productivity of
the organisation.
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References
 Dobre, O.I., 2013. Employee motivation and organisational
performance. Review of applied socio-economic research, 5(1).
 Eungswan, K. and Chantuk, T., 2016. Motivation to Increase Work Efficiency
in Elders. Veridian E-Journal, Silpakorn University (Humanities, Social
Sciences and arts), 9(4), pp.215-231.
 Hamel, G. 2019. Negatives of Motivating Employees With Financial Rewards.
[online] Smallbusiness.chron.com. Available at:
https://smallbusiness.chron.com/negatives-motivating-employees-financial-
rewards-37782.html [Accessed 9 Apr. 2019].
 Kvaloy & Schottner, 2015. Incentives to motivate. Journal of Economic
Behavior and Organisation, 116(C), pp.26–42.
 Kvaloy, O., Nieken, P. & Schottner, A., 2015. Hidden benefits of reward: A
field experiment on motivation and monetary incentives. European Economic
Review, 76, p.188.
 Miller, B., 2015. Pros and Cons of Monetary Incentives. [Online] HR Daily
Advisor. Available at: https://hrdailyadvisor.blr.com/2015/01/14/pros-and-
cons-of-monetary-incentives/ [Accessed 9 Apr. 2019].
 Rajhans, K., 2012. Effective organisational communication: A key to
employee motivation and performance. Interscience Management
Review, 2(2), pp.81-85.
 Reddy, C., 2016. Top 15 Pros and Cons of Monetary Incentive Plans. [Online]
WiseStep. Available at: https://content.wisestep.com/top-pros-cons-monetary-
incentive-plans/ [Accessed 9 Apr. 2019].
 Shchetinina Ludmila V, Rudakova Svetlana G & Lobunets Iryna S, 2018. Non-
Monetary Motivation of Staff as a Way to Increase Efficiency of its Work.
Problems Ekonomiki, 2(36), pp.268–275.
 Shujaat, S. and Alam, R., 2013. Impact of non-monetary rewards on
employee’s motivation: a study of commercial banks in Karachi. Journal of
Management and Social Sciences, 9(2), pp.23-30.
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 Uzonna, U.R., 2013. Impact of motivation on employees performance: A case
study of CreditWest Bank Cyprus. Journal of Economics and International
Finance, 5(5), pp.199-211.
 Wynter-Palmer, J.E., 2012. Is the Use of Short-Term Incentives Good
Organisation Strategy? Compensation & Benefits Review, 44(5), pp.254–265.
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