In the study of economics, it is a common practice to analyse and predict the actions of people assuming that they are perfectly rational and attached to monetary utility, the kind of people who have now come to be known as ‘Econs’. Nevertheless, it is most likely that all the employees in your organization are ‘Humans’, those who have emotions, feelings, and whose actions are governed by what we call today ‘Animal Spirits’ – these are the people you want to make happy. And as the saying goes, money can’t always buy happiness.
Non-monetary incentives can be a powerful tool in improving employee motivation and thus, productivity. It is no wonder that many organizations are increasingly adopting this new strategy to keep workplace spirits up and push their employees closer to their capabilities, more than what money can achieve.
What are non-monetary incentives?
Non-monetary incentives function primarily on two things, opportunity, and recognition. These could range from flexible hours, paid sabbaticals, and training, to gifts, company trips and awards. Traditionally, it was believed that “money motivation” is the most effective kind of motivation that employees can be given. However, multiple studies have shown since that the correlation between motivation and monetary rewards is quite low, and many employees tend to value incentives like chances to lead a project or be appreciated by the leadership team more than increase in pay or stock options.
This may sound counter-intuitive at first but think about it. When a friend of yours gives you money to buy something, you thank them and spend it on something. But when they give you a gift or a surprise, you create a memory that you associate with them for a long time. Similarly, the feeling of being appreciated and recognized is one that lasts for long in the mind of employees. You are not only valuing their work but valuing the person you know as well. This, coupled with the limited resources and a need for meticulous tracking of employee productivity with monetary incentives, makes fringe benefits an attractive proposition.
The sustainability factor
As an organization, you also have to keep in mind that it is necessary to continually engage in providing incentives, either steadily or progressively, in order to keep employees motivated over long periods of time. One-time or declining benefits won’t cut it. Sometimes employees may get too used to regularly receiving monetary rewards because of which not receiving it once may leave them dissatisfied. At the same time, you need to be able to allocate enough resources regularly to make such a reward system sustainable. In these cases, indoctrinating your employees in a monetary system will not help.
On the contrary, non-monetary incentives are both easier to sustain and more likely to be remembered in the long term. Research also shows that while new and younger employees are more inclined towards money, those who are further into their career value other benefits more. In such contexts, long term initiatives like a workspace with positive vibes, inculcating a collaborative company spirit, creating a supportive framework, are all forms of non-monetary incentives that are likely to drive employee happiness and productivity up. Even an employee ecstatic about a bonus check will be happier over longer periods being able to return home to their family every day on time and maintaining a healthy work-life balance.
Making the most out of fringe benefits
Psychologists say that human resources managers need to apply a variety of ‘strokes’ (units of stimulating human recognition), a combination of various incentives, to keep their employees at their happiest. Overdoing non-monetary incentives and depriving employees of bonuses and performance-based rewards will not get the best results either. While maintaining a satisfactory monetary reward system, organizations can complement it with:
- Public recognition
- Flexibility at work
- Added time off
- Words of appreciation
- Engagement opportunities
- Personal and Professional Development Training
- One-on-One time and mentorship
- Facilitating fun experiences
These are just few ways in which you can boost employee morale and keep them happy over long periods of time, enabling you to come closest to peak efficiency, making the model a win-win.
I have penned down what worked for me while leading larger teams.
Would love to know your thoughts as well. Do share.