The debate on whether money motivates employees
more than other factors has been prevalent in organisations for quite a
long time. Should incentives or rewards be financial or non-financial?
Both options make an action seem more purposeful, but how one chooses
the incentive option that is ideal for the organisation, is crucial.
Sridhar Ganesan, managing
consultant - Mumbai operations and rewards practice leader, Hay Group,
expresses that there is no 'this or that', when you plan for an overall
rewards value proposition for the employees; it has to be holistic,
which means both have to be aligned in a balanced manner.
"The reward strategy has a
more powerful effect on employee engagement if it doesn't just
concentrate on cash incentives, but instead creates an overall employee
value proposition incorporating intangible rewards such as quality of
work, non-financial recognition and work climate," he says.
According to Ashish Kumar Srivastava, director - HR, Canara HSBC
Oriental Bank of Commerce Life Insurance Company, "As an organisation,
the challenge is to determine whether financial rewards or non-financial
ones have a greater impact on the motivation of various employee
segments. A 'one size fits all' approach does not work. For example, a
young sales employee working in a target-driven environment is more
likely to be motivated by tangible monetary incentives, whereas for a
mid-level manager, access to a valued leadership development training
programme may hold greater relevance."
Financial rewards is an extrinsic motivating factor, and non-financial incentives represent the intrinsic one, points out Rajita Singh, head HR, Broadridge Financial Solutions India Pvt Ltd.
"But it's interesting to note
that eventually, we employ less intrinsically motivated actions. As
children, spontaneous learning and curiosity are vital for our cognitive
development . As we get older, rules and regulations mean that most of
what we do is extrinsically motivated to some extent. And now in the
conceptual age that we live in, we seem to be going back to the route we
must, which is - small things matter," she avers.
Understanding employee
perceptions of the reward package on offer can greatly enhance an
organisation's ability to deliver a return on its investment. Ganesan
explains, "At the CXO level, our research points to a growing focus on
performance, thus leading to a more pronounced variable pay component in
overall compensation - pegged to be at around 15 to 30 per cent of the
fixed CTC.
