Financial and non financial rewards

I once had an interesting conversation with the owner/manager of a clothing

manufacturing company. He operated a large and successful business, principally
supplying uniforms for the corporate market.
He was surprised by some of his workers. They worked on a piece work rate (paid
per item) and some of the very efficient staff did not produce as much as they were
capable of. They worked hard at the start of the pay period, but then they tapered
off. He expected them to work hard the whole time, as they were paid by what they
produced - the harder they worked, the more they were paid. He expected that the
extra money reward would motivate them.
Motivation is a complex concept. Remuneration is also complex. Individuals
react in different ways to pay schemes.
A simple explanation for the clothing worker behavior is that they did not work just
for the money. They enjoyed the working environment and the social interaction it
provided. They liked to have work, to be employed, and yes they needed a certain
level of income. But once they achieved that, the pressure to work hard was
reduced. Given that the actual work task was quite monotonous and repetitious, it
was not surprising that they exhibited this behavior. Drastic work design was
required.
People think that money is a motivator. It does have an effect, but motivation
involves far more.
Sales people are the classic example. Most are on performance based schemes. But
what is one of the main themes sales and marketing consultants write about? You
guessed it - how to motivate your sales team! Consultants would not need to write
motivation articles if financial reward alone worked.
Equity in compensation practices
Positive effects come from good financial and non-financial rewards. It is very
important to have a well managed remuneration system in place. Fair and reasonable
reward is essential and very important for good morale. I believe strongly in the
equity theory of motivation. Simply put, the theory states that people have to believe
that their pay is equitable with others. When they compare their salary and benefits
with their colleagues and co-workers, they must believe that they are being fairly
compensated. If they believe their compensation is not equitable, they become very
de-motivated and their work performance suffers.
Financial and non financial rewards
I subscribe to the theory that states it is the nature of the work that is important.
Financial compensation is an element, the importance of which increases when the
compensation received is not appropriate. Non-financial rewards can be very
important for their long-term effect.
Too many employees are "disengaged" from their employment*. It is again time for
many organizations and business to look at their human resources and management
practices. The figures quoted below are quite disturbing.
Summary
Management should ensure that their organizations and businesses are using the full
range of financial and non-financial rewards available to them. An over-reliance on
financial compensation may lead to ongoing problems.
Dr. Shailesh Thaker renowned management guru, human potentiality, philosopher,
author and motivator in India, offers HR/HRD Training, Leadership Workshops,
Management Training, CEO Training and business consulting services through
Knowledge Inc.