Why Monetary Incentives Are An Ineffective Way For Increase Motivation Essay

Why Monetary Incentives Are An Ineffective Way For Increase Motivation Essay

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Motivating Employees Where Raises Are Not Available
Monetary incentives increase motivation for the short-term; however, managers who focus on non-monetary incentives helps increase their employees’ motivation which leads to an increase employee retention rates and profits for the company. My goal of this paper is to explain why monetary incentives are an ineffective way to increase motivation, and to provide insight and examples of non-monetary incentives such as a flexible schedule, paid time off, and management recognition that managers can employ to increase and retain their employees’ motivation.


Often monetary incentives (i.e. raises) will provide an increase in motivation; however, Dholakiya states that, “The happiness linked to a pay raise wears off quickly. At best, it will have a passing impact on motivation. It’s common human tendency to want more, especially when it comes to salary” (Dholakiya). The reality of monetary incentives is that they will continually have to be given in order to maintain or increase the employees’ motivational levels; therefore, the costs for the company or manager’s department continually increases which leads to a decrease in profits. The potential negative results could lead to company-wide layoffs which would decrease employee retention rates and motivational levels drastically. It is noted that, “When used poorly, monetary rewards can feel like coercion, an effect you see in the classic carrot-and-stick approach to motivation” (Goodman). Monetary incentives are only a temporary solution to increase motivation; therefore, an effective manager should employ non-monetary incentives that enable them to “rip the band-aid off.”


Studies have shown that employees’ no longer value money a...


... middle of paper ...


...k harder. Speaking from personal experience, I remember the first time I was invited to Ruth Chris Steakhouse by the CEO. He wanted to thank me for saving the company thousands of dollars by negotiating a gas imbalance settlement that could have been a huge financial burden to the company. I was ecstatic, because it motivated me to work harder and find more ways I could save the company money to get that recognition again.


In retrospect, non-monetary incentives are an effective way to increase employees’ motivation without increasing costs to the company. Flexible schedules, paid time off, and management recognition are just some of the programs that companies and managers can implement. By engaging in an effective incentive program, companies and managers will be able to increase employee retention rates and profits for years to come.


























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