Key Factors to Consider with Financial Motivation:

• Employment Legislation

• Recruitment and Retention

• The extent to which pay should be linked to performance

• Individual vs Team Incentives

Financial Methods of Motivation:

• Wages: Normally paid per hour worked paid weekly/monthly

• Salaries: An annual salary paid at the end of each month

• Bonuses: Paid when certain targets have been achieved- performance-related

• Commission: Paid according to volume or value of sales achieved

• Profit share: Where a cit of the business profits is shared amongst some/all employees

• Share options: Where some/all of the employees have the option to buy shares in a business

• Fringe benefits: In addition to basic pay- e.g. company car, private health insurance, free meals, staff discounts

Pros of financial methods of motivation:

• Influences positive behaviours

• Encourages high performance

• Increases productivity

• Easy way to achieve short-term goals

• Improves working atmosphere

• Can be used to recruit new employees

• Employees feel appreciated and valued

• Improves staff morale, and retention level and increases engagement

• Provides an element of control and reward for the employee

Cons of financial methods of motivation:

• Can create a sense of entitlement

• De-motivates employees who do not reach targets

• Short-term focus

• Inconsistent bonuses based on business profits

• Can inhibit teamwork and cause competition among co-workers

• Burnout from overworking to achieve goals

• Pushing customers for sales

• Risk of unethical behaviour to reach goals

• Risk of quality performance to meet goals