The Effect of Monetary and Non-Monetary Rewards on Employee Motivation: A Review

Abstract

The success of any facet of the business can almost be traced to motivate employees. This is especially tnte and important in today's turbulent and ofien chaotic envirorument where commercial success depends on employees using theirfull talents. The ability to attract, retain and develop talented employees is a key feature of a successful business. But this is not always easy because people are all different with different needs, interests, goals and thoughts and therefore would be motivated by dffirent things. Sometimes employees even y have gools that conflict with the organization's objectives. Therefore, monetary and non-monetary ranards are frequently suggested as methods for enhancing the motivation and performance of employees ond to align the employees' objectives with the organizations. The objective of this paper is to review the literature relating the effict of monetary and non-monetary rewards on employee motivation. The review confirms the positive effect of monetory and non-monetary rewards on employee rnotivation. Moreover, it reveals that non-monetary rewards are more effective in the organizations where the ernployees are paid comparable salaries to compensate for their desire for rilonetary incentives at the work place. This means that nonmonetary rewards would not be ffictive in a situation where the employees are struggling to fulfill their physiological needs as these are the most basic requirement of the employees. But monetary rquards are lhe fundamental component in employee motivation and it has the unique power to motivate employees by satisfying dffirmt kinds of needs without atty support of other rewards. Therefore, the organizations have to focus on both of the monetary and,.Eton-monetary rewards and eingloy''method/s appropriately in order to motiiate and retain their employees and in turn to macimize the o t ganizational p erformance.