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The paper 'Non-Monetary Incentives are More Effective in Motivating Employees than Monetary Incentives' is a good example of a Management Essay. One of the most important and fundamental roles of human resource managers in organizations is the motivation of the organizations’ workforce to be able to meet organizational goals. Employee motivation is often correlated to organizational performance as it may ultimately determine the success or failure of an organization itself in relation to achieving its goals and by extension the effectiveness of its human resource management practices (Wiley 1997).

The implication for human resource managers is that a more motivated workforce is more likely to contribute positively to organizational performance through the realization of organizational goals. Therefore, it important for an organization’ s human resource management team to put in place effective motivation plans or strategies to propel its workforce towards the achievement of organizational goals. There have been several employee or workforce motivation strategies that have been used by human resource managers to motivate their organization’ s employees towards the realization of organizational goals. These motivational strategies basically entail the provision of certain incentives to employees by mainly providing extrinsic (external) rewards.

Intrinsic or internal rewards are rooted in the self and motivate employees by providing satisfaction and enjoyment simply by completing the task itself- the activity is the reward in itself (Deci 1971:1975). However, organizations mainly use extrinsic rewards- other forms of reward outside the self- to motivate their employees. Extrinsic rewards can be categorized into monetary and non-monetary rewards (Deci 1971:1975, Morell 2011). Monetary compensation-based rewards include performance-based pay schemes (bonuses), employee benefits such as free health and dental insurance, or profit-sharing agreements (Morell 2011, Peterson and Luthans 2006).

On the other hand, non-monetary incentives include providing employment security, training, learning, and development opportunities for employees, praise, recognition, or what Ciulla (2000) summarizes as providing a “ meaningful workplace. ” This essay will argue the proposition that non-monetary incentives through providing meaningful work (as conceptualized by Ciulla) are more effective in motivating employees than monetary incentives such as performance-based pay. First, the essay will briefly outline the propositions of several theories of motivation and their implications for this proposition. The essay will then examine the motivational effect of monetary and non-monetary incentives on organizational performance based on a review of the empirical literature.

In conclusion, the essay will reiterate the proposition that non-monetary incentives have proven to be more effective motivators for employees in organizations across various industries and markets. Human Resource Management and Employee Motivation Employee motivation refers to the process through which human resource managers stimulate, energize, or activate goal-oriented behavior in the workplace of an organization (Reiss 2004). Therefore, motivation influences behavior or performance either directly or indirectly by giving purpose and desire towards the achievement of goals.

For employees to be effectively motivated, management or leadership must put in place strategies that appeal to the personalities of different employees (Wiley 1997). However, before this is done, human resource managers must understand what it is that motivates their employees. Various theories have been put forward in an effort to explain what it is that motivates employees. Employee Motivation: Motivation Theories One of the earliest motivation theorists was Frederick Winslow Taylor who pioneered the scientific management theory of motivation. Taylor proposed that what primarily motivates employees is monetary remuneration or compensation for their efforts.

This theory proposes that the most effective motivation strategies are monetary or performance-based since better pay motivates employees to commit to their jobs and work harder to reap the financial benefits of better performance (Wiley 1997). In contrast to Taylor’ s scientific management, Elton Mayo (1880 – 1949) of the Human Relations School of motivation identified a different set of motivational factors as a result of the outcome of experiments at the Hawthorne Electric factory in Chicago. Mayo concluded were that employees would be better motivated if their social needs in the workplace were met by their employers (Reiss 2004).

The implication was that to effectively motivate their employees and improve their productivity, employers should treat them with more respect, take their opinions into consideration and enhance the quality of interaction in the workplace. These practices are effective as they raise employees’ self-esteem (Kovach 1999).


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