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Monetary incentives refer to the rewards offered in the form of money in order to ensure that the firm or organization retains its best employees. Since it satisfies the needs, then it qualifies to be termed as a motivator in itself, and firms use it as a retention, motivation and as a form of the punishment, when it is being withheld or withdrawn. Money plays a crucial role in the employees’ motivation, and, therefore, this makes them work hard. On the other hand, unlike monetary incentives that serve for the short run, non-monetary incentives are beneficial in the long run. They offer a greater motivation due to the recognition aspect and worthwhile work (Neelkamal 2012).

Comparison

Both are the Forms of Motivation

They are both aimed at motivating employees. The monetary or extrinsic incentive involves a direct giving of cash, while the nonmonetary or intrinsic one does not involve money. Firms suffer negatively, when they do not consider either of the two forms of reward. This is because money in itself might not be a motivation to all people, and, therefore, there is a need to use the two forms of reward in order to complement each other. While doing so, the hierarchy of the organization should be well conversant with employees, including the information regarding what will most likely motivate them. They not only work to retain the best, but also to enhance the skills among employees and promote the continuation of the good culture of the organization. This is due to such recognition and rewards that will make employees stay, while others will want to work in that organization; thus, there is a creation of the competition which will definitely transform into the increased productivity and high-quality services (Neelkamal 2012). The author further states that if the incentives are not awarded, a retrogressive effect of the organization may occur, and in this case, employees may feel de-motivated; therefore, it can lead to a poor quality and low production.

They Both Lead to the Increased Productivity

Monetary and non-monetary incentives aim at making employees, especially subordinates, feel motivated to carry out their day to day activities in the firm, and this means that a motivated employee will do his/her best. According to Martha (2013), the Maslow hierarchy of needs highlights an essential basic to a human, and if these needs are well catered for, then the person is encouraged to give their best performance at the workplace. When one is psychologically healthy, they are able to concentrate more on the work at hand, they become more cautious of errors, and the result is a high yield. In addition, these programs were as an attraction for the best talents in that as they weigh their options, they look forward to that workplace that they have a chance and opportunity to give their best and in return get incentives for purposes of paying the bills as well as feeling a sense of the recognition and worth. It is a combination of these attributes that enhance the desired high level of productivity and, therefore, leading to a greater customer satisfaction.

Both are the Means of Compensation

Either monetary or nonmonetary incentives can qualify as a means of compensation. It is inevitable for the organization and employees not to work effectively sometimes. This can take place, when an employee is sick or injured, while being in the line of duty; and in such a situation, the firm has to step up and take the responsibility in one way or another. This prompts the firm to give a compensation to the employee in terms of offering a medical care, transportation and other financial benefits and personal visits to the employee at the hospital by the members of the organization. It is out of such activities that the employee feels of worth and proud as a member of that organization. In this case, both the money and personal values have been accorded to the individual, leaving him/her happy and contended by the gesture offered. Therefore, for the organization to claim that it is fully offering a compensation to the employees, monetary incentives are not enough but ought to be accompanied by appropriate non-monetary incentives, since, in particular cases, the non-monetary incentives play a vital role in making employees feel recognized and appreciated(Martha 2013).

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Contrast

Differences in Types

They both offer different rewards, whereby monetary incentives offer money, where the employee does exceedingly well or pleases the management. Sharing profits, money bonus and other acts that promote the employees’ compensation are a part of the monetary incentives, while non-monetary one in most cases come about with an opportunity as a promise. These opportunities may include: a better working environment, being given a day or so off and a flexible work plan (Jared 2015). According to Madhuri (2014), the types of incentives awarded may vary to a considerable degree in regard to the employees’ status. He notes that the lower level employees give much preference to the financial incentives as they need the hard cash so that they can meet their basic needs, while the high-level employees, comprising of the directors and managers, give much preference to the non-financial incentives, since for them, it is a matter of the promotion, appreciation, and recognition. Madhuri emphasizes that 83 percent of those involved in the study pointed out that their main preference was monetary incentives compared to just 17 percent that were for the non-monetary incentives. This is to show that more preference is given to the financial motivation, since most of the people would like to meet their daily basic needs.

Differences in Terms of the Purpose

The monetary incentive is a reward in the form of a cash bonus for the superb job done by the employee, and the latter can work towards its achievement, but, on the other hand, the non-monetary incentive aims at rewarding a good work that has been already accomplished, and the employee does not necessarily work directly towards it (Jared 2015). Neelkamal (2012) outlines the two factors of the motivations theory put forth by Herzberg, where it is argued that the purpose of the incentive contributes a lot to a person’s motivation. He points out that the environmental factors and hygiene of the workplace boost the morale of employees to a considerable degree. In this case, employees are motivated more by non-monetary incentives, but they will work for the monetary rewards, since that is what they urgently need. This is to emphasize what Herzberg believes to be true in that non-monetary incentives are the prerequisite for motivation, and that the opposite of satisfaction is not always necessarily dissatisfaction. In this regard, the non-monetary incentives are purposed to make people feel good about them as individuals out of what the organization sees their worth. This experience is the one that the factor of satisfaction forms the basis, upon which one’s attitude and morale are built. Once satisfied, the employee is now motivated to work towards the monetary incentives. Therefore, non-monetary incentives work to guarantee the intrinsic fulfillment, which results in the extrinsic one.

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Effectiveness

The two types of incentives vary in their degrees of effectiveness, with the monetary incentive being more effective. This is because people are more accustomed to money, since the payment of bills requires hard cash; therefore, it becomes more likable among many employees (Jared 2015). Madhuri (2014) asserts that in regard to the Maslow hierarchy of needs, lower needs are satisfied by the financial incentives, while the higher needs are satisfied by the non-monetary incentives. In this scenario, therefore, there is a direct correlation between the lower status population and the lower needs, while the same relationship is realized in terms of the higher needs and the higher status. Hence, the high-status individuals in the organization will be in a position to provide their basic needs without further financial incentives, but in order to get a feel of prestige and honors, they will in most cases work towards the non-financial incentive. On the other hand, the lower status individuals have the primary objective of meeting their lower level basic needs, and this will motivate them towards working for monetary incentives. It is, therefore, crucial for the organization to understand its employees and their rewards preferences, so that they can give each group incentives in accordance with its preference. For example, it can run a monetary program for the lower status employees, while initiating a non-monetary program among the high-status employees. it is clear that the non-monetary incentives serve to motivate the smaller percentage of the high-status individuals, while the monetary incentives serve to motivate the lower status individuals.

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Conclusion

Consequently, it is clear that both the monetary and non-monetary incentives serve as a means of compensation, motivation as well as a way of increasing the productivity in the organization. In contrast, it was noted that monetary incentives are more preferred due to a high demand for money. In addition, the monetary incentive influences the motivation of mostly the lower status employees, while the non-monetary one serves to motivate the high-status employees. Lastly, non-monetary incentives work to bring the intrinsic fulfillment, while monetary incentives aim at creating the extrinsic fulfillment.