The debate on whether money motivates employees more than other factors has been prevalent in organisations for quite a long time. Should incentives or rewards be financial or non-financial? Both options make an action seem more purposeful, but how one chooses the incentive option that is ideal for the organisation, is crucial.
Sridhar Ganesan, managing consultant – Mumbai operations and rewards practice leader, Hay Group, expresses that there is no ‘this or that’, when you plan for an overall rewards value proposition for the employees; it has to be holistic, which means both have to be aligned in a balanced manner.
“The reward strategy has a more powerful effect on employee engagement if it doesn’t just concentrate on cash incentives, but instead creates an overall employee value proposition incorporating intangible rewards such as quality of work, non-financial recognition and work climate,” he says.
According to Ashish Kumar Srivastava, director – HR, Canara HSBC Oriental Bank of Commerce Life Insurance Company, “As an organisation, the challenge is to determine whether financial rewards or non-financial ones have a greater impact on the motivation of various employee segments. A ‘one size fits all’ approach does not work. For example, a young sales employee working in a target-driven environment is more likely to be motivated by tangible monetary incentives, whereas for a mid-level manager, access to a valued leadership development training programme may hold greater relevance.”
Financial rewards is an extrinsic motivating factor, and non-financial incentives represent the intrinsic one, points out Rajita Singh, head HR, Broadridge Financial Solutions India Pvt Ltd.
“But it’s interesting to note that eventually, we employ less intrinsically motivated actions. As children, spontaneous learning and curiosity are vital for our cognitive development . As we get older, rules and regulations mean that most of what we do is extrinsically motivated to some extent. And now in the conceptual age that we live in, we seem to be going back to the route we must, which is – small things matter,” she avers.
Understanding employee perceptions of the reward package on offer can greatly enhance an organisation’s ability to deliver a return on its investment. Ganesan explains, “At the CXO level, our research points to a growing focus on performance, thus leading to a more pronounced variable pay component in overall compensation – pegged to be at around 15 to 30 per cent of the fixed CTC.