IMPACT OF NON-MONETARY REWARDS ON EMPLOYEES’ MOTIVATION

INTRODUCTION

The overall success of an organization in achieving its strategic objectives relies heavily

on the motivation level of employees. All organizations, regardless of sector, size or industry

require motivated workforce that ensures the efficiency, high organizational output and

prosperity of the organization. De-motivated employees are likely to put in little or no effort in

their jobs, produce low quality work, mostly avoid their workplace and even exit the

organization if provided opportunity. On the other hand, employees who are motivated to work

are likely to be determinant, innovative and competent. Motivated employees are contented,

dedicated and work enthusiastic, resulting in optimum level of employee retention, loyalty and

harmony. This contributes significantly to the growth and development of the overall

organization.

Consequently, one of the most compelling challenges facing today‟s organizations is how

to make sure that employees are highly motivated. Numerous studies have proved that rewarding

employees is one of the best ways to keep the workforce motivated. It has been found through

studies that connection between rewards, recognition and motivation of employee are

strategically significant to the success of an organization. Motivation, thus, is a factor that exerts

a driving force on our actions and work. So, rewards both monetary and non-monetary seek to

attract people to join an organization and keep them motivated to perform up to high levels. This

research work is also aimed to ascertain the practice of monetary and non-monetary rewards in

the banking industry and its impact over motivation level of the employees. Banking industry is
extremely competitive service sector wherein the employees are required to provide exceptional

quality services to their customers. To obtain such services employees must be motivated.

Accordingly, employee incentive programs have been found to be the most commonly adopted

technique among many organizations. Research shows that organizations are pumping billions

of each year into employee incentive programs.

Next question is, „what is reward?‟ research works have found out that people in the

organizations are motivated by monetary and non-monetary rewards both. For example, research

works of Armstrong and Murlis (1991), Schuler and Jackson, (1996) and Lai (2007) explained

that total remuneration consists of financial rewards (fixed and variable) and non-financial

rewards (praise, achievement, responsibility, freedom, job satisfaction, job security and personal

growth etc). however, the fact remains that every employee has their individual set of motivation

and incentives to expend effort. Some are motivated by money while others are motivated by

recognition, career advancement or even by job security. Thus it is wrong to assume that

everyone shares a common motivator.

PURPOSE

This study will conduct to measure the impact of non-monetary rewards on employees‟

motivation in a banks. The study aims to highlight importance of the non-monetary rewards in

terms of their effectiveness as well as efficiency. The study also will identify to what extent the

banks are taking care of this source of employee motivation.

 Providing training to the employees does not yield any motivating impact upon the

employees in banks.

 Providing career growth related opportunities to the employees does not yield any

motivating impact upon the employees in banks.

 Providing fair recognition on performance to the employees does not yield any

motivating impact upon the employees in banks.

 Providing effective internal communication channels does not yield any motivating

impact upon the employees in banks.

 Providing job security to the employees in the banks does not yield any motivating

impact upon them.

LITERATURE REVIEW

Khan and Farooq (2010) conducted a study on impact of rewards on employee

motivation in Commercial Banks. The study showed a positive significant relationship between

rewards and employee motivation among the employees‟ of commercial banks in Pakistan.

According to the study findings, motivated employees are more energetic and productive on their

work. When employees expect personally valued, recognized and rewarded, they undoubtedly

work harder and feel motivated to accomplish their tasks. They are likely to perform way above

the level expected of their capacity. According to a study by Matthew et al, (2009) there is

positive connection between organization effectiveness and employee motivation. Earlier,

Schuler and Jackson, (1996) had already found out that the connection between rewards,
recognition and motivation of employees is strategically significant to the success of an

organization. According to a seminal study conducted by Armstrong (1988), motivation at

work operates in two ways. First, people can motivate themselves by doing work that

intrinsically motivates them and which leads them to expect that their goals will be achieved.

Secondly, higher management can provide a motivating environment through such methods as

pay and bonus schemes. He called the former the intrinsic motivation while the latter the

extrinsic motivation. Intrinsic motivation is concerned with selfgenerated factors, which

influence people to act in a certain way. These factors include responsibility (feeling that work is

important and having control over one's resources), freedom to act, scope to use and develop

skills and abilities, interesting and challenging work and opportunities for advancement and

growth. Extrinsic motivation, on the other hand, is concerned with what is done to or for people

to motivate them. This includes rewards such as increased pay and bonus schemes. Latter Ajila

(1997) found that an intrinsically motivated individual is committed to his work to the extent to

which the job inherently contains tasks that are rewarding to him. And an extrinsically motivated

person is committed to the extent that he can gain or receive external rewards for his job. Ajila

(1997) further suggested that for an individual to be motivated in a work situation there must be

a need, which the individual would have to perceive a possibility of satisfying through some

reward.

A “McKinsey Quarterly” study found that 70% of organizations are using or planning to

use motivation programs for their organizations (Dewhurst et al, 2009). According to the

findings of this study, for most people non-monetary rewards or recognition serve as a better

motivator than money. Money alone is not always enough to motivate high performance, the

study concluded. Latter, a study by Latham and Locke (2004) found that motivation can also be
achieved by non-financial rewards and recognition like praise, achievement, responsibility and

personal growth etc. according to the study, non-financial reward can create perceptions of the

overall fairness of a rewards program which leads to employee‟s motivation towards their work.

Sammer (2011) coined a term “total reward” that includes career developmental

opportunities, non-financial recognition, employee development and training besides monetary

incentives and rewards. Earlier, Armstrong and Murlis (1991) had also talked about the same

concept of total remuneration. According to them, consists of financial rewards both fixed and

variable and the non-financial rewards including verbal praise, achievement, responsibility,

freedom, job satisfaction, job security and personal growth etc. likewise, Strovall (2003) argues

that non-financial rewards motivate workers which lead to job satisfaction and an effective

reward package could have an important impact on the employee‟s performance. Dzuaranin

(2012) says that companies that only focus on monetary incentives to motivate their employees

must also introduce nonmonetary rewards to their performance rewards systems to increase the

motivation level of their employees since many people prefer the former over the latter. The

study suggests that the organizations using effective reward programs better achieve their

organizational objectives and also influence employee behavior.

In the same stream, Mason (2001) found that recognition in various forms is a powerful

motivational and retention strategy for any organization. He argues that it is not expensive for

any organization to adopt strategies to motivate their talented employees by recognizing their

efforts. A study conducted by the US Department of Labor found that 46% of people leave their

jobs because they feel unappreciated and management fails to handle this huge turnover because

of not having proper employee rewards and recognition strategies says Robert (2005). The study

found a positive relationship between rewards, recognition and motivation and concluded that
good reward and recognition system contributes to employee motivation and satisfaction. More

highly the employees would be rewarded and recognized, the more they will be motivated – and

motivated employees are less likely to quit the job, the study concluded.

Wiscombe (2002) conducted a research with managers and revealed that recognizing

employees assists them to become more productive. According to this study, 69.3% of the

respondent managers indicated that providing non-monetary recognition helps more the manager

to achieve their organizational goals. A survey by the Professional Secretaries International

revealed that 30% of professional secretaries prefer a simple letter of appreciation from their

managers. However, only 7% had got such letters in their career. The finding bespeaks

indifference of the organizations towards such effective and efficient source of employee

motivation on the job.

EFFECTIVENESS

1 INTRODUCTION

This chapter aims at drawing a brief outline and explain the objectives of this study

through three separate sections: (1) background of the study, (2) purposes and objectives of the

study, and (3) structure of the study. The first section supports general understanding of the

topic. The second one clarifies the purposes and objectives of the study followed by the third

section which includes a short description of the framework of the study.

1.1 Background of the study

Today in a world of competitive corporate environment, every company – regardless of

scales and markets is striving to gain competitive advantage(s), to perform better and to achieve

productivity and effectiveness. In order to do that, it is important for an organization to clearly

define its objectives, and to know how to do it well with the use of available resources. However,

mentioning an organization’s resources, it is the human resources that fill all the gaps between

each step to success. Personnel are the one who use their competencies and knowledge to

provide support to the company as the way of achieving goals. Organizations across the globe

that consider their human resources as a central core of the business and continuously increase

the level of their employees’ motivation and performance tend to be more effective (Adi, 2000,

Anka, 1988, Rothberg 2005).

1.2 Objectives of the study and research questions

intended objectives (Etzioni 1964). According to Waterman and Peters (1982), there are

elements in an organization that needs to be coordinated and supported in order to achieve the

organization’s productivity and effectiveness. They are classified as hard elements (strategy,

structure, and systems) and soft elements (share values, skills, style, and staff). This study,

however, will concentrate only on the staff element and with the focus on employee motivation,

since it is notable that there exists a strong relationship between employees’ motivation and

organizational effectiveness. Employees with high motivation are thought to have better work

performance, and overall resulting in a better, more productive and effective company

performance (Abbah 2014).

Acknowledging the importance of employees’ motivation in everyday work, the research

is carried out with the aims to:

• Study the definition of employee motivation, its concepts and methods, and the link of it

to organizational effectiveness

• Find out what factors motivating employees the most

• Provide suggestions for companies and managers in order to increase employees’

motivation.

1.3 Methodology

Both primary and secondary data collection methods will be used in order to acquire data

for this research. First, secondary data will be gathered through such sources as books, articles,
and from online platforms to get a thorough understanding about the research. Furthermore,

primary data will be obtained through a tailored-made survey.

1.4 Structure of the study

The study comprises of five sections. The first section introduces general information,

including the background, purpose and objectives, and structure of the study. The study’s

theoretical framework is presented in the second section. All the theories related to employee

motivation are outlined and explained. The following chapter describes the research

methodology chosen in this study. Also, the limitations, as well as validity and reliability are also

explained in this section.