Financial & Non-Financial Methods

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Financial Methods of Motivation

There are many ways that businesses try to motivate their employees. Often, money is used to achieve this.

Salary

Increasing the amount a worker is paid may increase their motivation. The more they get paid, the more workers will value the job, and so the more they will want to keep it and do well for the business.
It can also mean that employees enjoy the work more if there is a higher financial reward. This can also lead to motivation.
However, a salary isn’t linked to an employee’s job performance. This means that an employee will be paid the same regardless of their quality of work and quantity of output.

Commission

Commission is paid out as a percentage of the sales that staff make.
It helps to motivate employees to do what the business wants to do. If they sell more, they are happy because they earn more money and the business is happy because they make more sales.

Possibility for promotion

A business that frequently promotes employees and uses internal recruitment is likely to motivate employees to perform well and stay at the business for a longer period of time.
The possibility of getting more opportunity may motivate some employees.
Promotions often lead to salary increases.

Bonuses

Bonuses are similar to commission but they are not just linked to sales.
Bonuses can depend on the quality of the work the employees have done.
Again, employees may be more motivated to act in the way that the business wants.

Non-Financial Methods of Motivation

Non-financial methods of motivation increase motivation but give employees benefits that are not financial. Management style, fringe benefits, autonomy, job rotation and job enrichment can all increase motivation.

Management style

The style of management affects how much an employee enjoys their work and how much they feel valued by the business. If they feel valued and enjoy their work they are usually more motivated to act in the interests of the business.
Different management styles give employees different amounts of responsibility.

Fringe benefits

Fringe benefits are benefits that are not financial (non-monetary) but can be included in an employment contract.
- Company cars, health insurance and sick pay are all examples of fringe benefits.
- Aldi gives all the graduates managing its stores an Audi A4 as part of their employment package.

Job rotation

Job rotation describes an employee moving jobs within an organisation. Some employees enjoy the variety that this provides.
Organisations like IAC, which owns Tinder and Expedia, is famous for moving employees around in the businesses that it owns.

Autonomy

Autonomy is the amount of freedom to do your job that your manager or employer provides. High levels of autonomy can motivate employees.
- For example, companies like Netflix trust employees to take an appropriate amount of holiday and do not enforce a fixed amount of holiday each year.

Job enrichment

Job enrichment involves creating jobs that are challenging for employees and that aren’t very repetitive.
Specialisation and working on production lines, although efficient and cost effective may not be the most enjoyable thing for the employee.