Evaluating Incentives
Business: AQA A Level (2023 Specification), topic 6.4.3
Financial vs. Non-Financial Incentives
When deciding whether to use financial or non-financial methods of motivation, a business must consider a number of influences:
Financial position
- The financial position of the business must be strong if financial methods of motivation are used to motivate employees, as these will directly increase the business’ costs.
Demands of the employees
- The values and demands of employees should be considered as in some cases employees may value financial methods of motivation whilst in other cases employees may prefer non-financial methods of motivation.
Competitors
- The actions of competitors may affect whether a business should use financial or non-financial methods of motivation as the business may need to compete with what competitors are offering their staff.
Test yourself on Evaluating Incentives
What external factor will influence the methods of motivation offered by a business?