Incentives

Financial Incentives

Financial methods of motivation include strategies which impact upon or influence the financial benefit employees receive from working within a business.

Payment

• Employees may be paid commission, which is a payment, usually based on the amount of goods an employee sells. Commission may be a percentage of sales made or can be a flat fee according to the volume of goods sold.

• For example, call centres often use commission to motivate employees. Using commission, employees may be paid a percentage of the revenue they make through securing sales.

Salary schemes

• Employees may be invited to take part in salary schemes. A salary scheme gives employees pension benefits usually based on their earnings and length of employment or membership of the scheme.

Performance-related pay

• Employees may be paid using performance-related pay. Performance-related pay is used to pay employees based upon their performance. Performance-related pay could be based on whether employees meet objectives or on how many products are made or sold within a period of time.

Non-Financial Incentives

Non-financial methods of motivation include strategies which do not directly impact upon or influence the financial benefit employees receive from working within a business.

Healthcare

• Employees may be given access to free private healthcare as a non-financial method of motivation.

Gym memberships

• Employees may be given access to gym membership as a non-financial method of motivation.

Child care

• Employees may be given access to free child care as a non-financial method of motivation.

Financial vs. Non-Financial Incentives

When deciding whether to use financial or non-financial methods of motivation, a business must consider a number of influences:

Financial position

• The financial position of the business must be strong if financial methods of motivation are used to motivate employees, as these will directly increase the business’ costs.

Demands of the employees

• The values and demands of employees should be considered as in some cases employees may value financial methods of motivation whilst in other cases employees may prefer non-financial methods of motivation.

Competitors

• The actions of competitors may affect whether a business should use financial or non-financial methods of motivation as the business may need to compete with what competitors are offering their staff.