When it comes to motivating employees, some companies like to use financial incentives and other companies like to use non-monetary incentives. There are benefits and drawbacks to both types. To figure out which one is best for your company, it is helpful to know the pros and cons of both employee incentives. Here is a closer look.
This can include things like bonuses, raises, paid time off, and other things that involve money. The main benefit of financial incentives is that it sends the message to employees that if they perform well, they can expect to make more money. Many employees will respond well to this.
There are several drawbacks to money-based incentives. For example, they can cost your company a lot of money. If you are going to keep providing bonuses and pay raises, then you need to make sure that you can adequately finance them. This means that you should reserve financial incentives only for people who are actively helping the company to make more money. That way, you can properly justify the incentives.
Another drawback to these employee incentives is that they do not provide any type of emotional or psychological reward. They only appeal to a person’s wallet, and to some employees, emotional incentives are more important.
Non-monetary incentives include things like recognition, respect, career development opportunities, retirement planning assistance, improved work environment, etc. Even though these things are not based on money, they still can be extremely coveted by employees at your office.
For example, you can offer a trophy at the end of your year for the top performing salesperson at your company. This type of public recognition can be incredibly motivating to your salespeople who are probably constantly trying to outdo each other anyway.
Offering to do things to make your employees work experience better, such as adding a pool table to the breakroom if the company makes X amount of profits, can also be very motivating. People want to work in a workspace that is fun and exciting. This is why Google has slides and 7 person bikes on its campus.
However, even though non-financial incentives can be very helpful, they are not perfect either. The main drawback of this type of employee incentive is that many people respond more positively to financial rewards.
Ultimately, both financial and non-financial rewards can be motivating for your employees. To figure out which one works best, you can offer different rewards at different periods and see which one gets the best results. When you find the one that works best, you can use that one. If they both work well, then you can use a combination!