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Monetary vs Non

Rewards for employees aren't always cash. Learn about non-monetary rewards and how you should use them at your company.

EMPLOYEE RECOGNITION

Monetary vs Non-Monetary Rewards: What's the Difference?

By Aarushi Singh

Table of Contents

Challenges with rewards - and how it impacts you in the long run

1. There’s no long term reward strategy

2. Rewards should be generic and applied in an umbrella fashion

What are monetary rewards and when to use them?

What are non-monetary rewards and when to use them?

1. Personal Growth

2. Career Advancement

3. Professional Development

4. Social Benefits

5. Community Involvement

6. Extrinsic Non-Cash Rewards

Shortcomings of Monetary Rewards

Shortcomings of Non-Monetary Rewards

Finding the Right Balance: Monetary vs Non-Monetary Rewards

Why do some employees work harder than others? Is it because they get bigger rewards or are they simply motivated to do well at their jobs? What can be done to motivate employees who might not be as intrinsically motivated as you’d want them?

Rewards have always ruffled some feathers in the past. While these questions are admittedly simple, they have a lot of context behind them.

If you’re a manager or an HR, you might often come across this problem at work. You would agree that motivated and productive employees are a critical element for organizational success, regardless of the company size or industry.

Offering rewards is a common approach that employees usually take, and there are two main types of rewards: monetary rewards i.e cash offered to individuals based on assessments of their performance, or non-monetary rewards such as making them a part of a thriving community, offering flexible working hours, paid leaves, health insurance, and more.

In 2020, a majority of employers said they had either increased or maintained some important benefits related to the pandemic. 78% of employers said they had expanded on telework options and 39% said they expanded offerings related to child care. Further, retirement benefits, which ranked second only to healthcare benefits since 2019, significantly dropped in rank importance behind other benefits categories.

What’s interesting, there’s no one-size-fits-all approach when it comes to incentives. Although it's important to retain top talent and build a community that works towards a shared goal, there are a lot of challenges along the way. For instance, how do you measure the impact of different rewards, both monetary and non-monetary, on the employee’s well-being?

In this article, I’ll help you understand the key differences between when to use monetary vs non-monetary rewards, whether or not monetary rewards improve performance, the type of rewards you should consider to boost employee engagement, and which programs outperform others (and why).

Challenges with rewards - and how it impacts you in the long run

Rewards don’t just impact someone’s first 30 days, instead, it sets the intention for how they will perform in the future, succeed for much longer, and whether they will stick around with your organization and develop company loyalty.

Here’s what most managers and talent acquisition teams miss:

1. There’s no long term reward strategy

Most companies reward their employees annually or bi-annually. While the conventional talent pool was satisfied - or not - with this regime, trends like the Great Resignation and the Great Hire after the pandemic have brought significant changes in the employee-employer relationship.

With the power being shifted from companies to candidates and employees, it’s crucial for you to think of rewards as a long term process that doesn’t just take place twice a year. And this doesn’t even have to be a monetary reward every time.

Things as simple as regular check-ins with the team, celebrating small project wins together, gifting shopping cards on birthdays, and the biggest of all - creating a positive environment where your team members feel heard and seen is one of the biggest rewards managers can truly give their employees.

These small steps also help you realign with the employee’s expectations or goals as the nature of their work shifts. Without constant touchpoints, you’re tossing employees into the deep end and thinking they’ll swim right back to you.

2. Rewards should be generic and applied in an umbrella fashion

Rewards should be created equal, but not generic. Sure, you can and should use a fair process to evaluate each employee.

However, every team and role has unique requirements that need to be addressed in a more tailored manner. The more specific and personalized your rewards are, the more it reflects how you’re invested in the employee’s success.

For instance, if Steve is an adventure sports fan who loves hiking and Kristen is an enthusiastic baker who bakes lip-smacking cookies and lemon tarts on the weekends, consider the fact that they are two very different characteristics. And so, the non-monetary rewards you’ll offer them should align with their interests.

Research and subsequent surveys have yielded surprising evidence about the effectiveness of monetary vs non-monetary rewards and the elements behind their success. Sure, money is a powerful motivator and the most foundational form of compensation. But is it the only motivator? Turns out, monetary rewards are important but not enough. In order to really keep employees happy, organizations must have a strong blend of both monetary and non-monetary rewards.

स्रोत : nectarhr.com

Difference between Monetary and Non

Monetary rewards are the incentives which involve direct money to the employees. Non-Monetary rewards are the incentives which do not involve direct money to the employees. Difference between Monetary and Non-Monetary rewards

Difference between Monetary and Non-Monetary rewards

April 2, 2017 / BUSINESS / 2 minutes of reading

What You'll Learn?

1 MONETARY REWARDS

2 NON-MONETARY REWARDS

2.1 Difference between Monetary and Non-Monetary rewards

2.2 CONCLUSION

Spread the Differences

Before talking about rewards and benefits given to the employees of the organization, we have to know about the importance of motivation at the workplace. The motivation of employees is the major issue that helps the organization to grow, every manager in the organization mainly focuses on employee motivation with the help of various rewarding techniques including monetary and non-monetary rewards at various levels of the organization.

MONETARY REWARDS

Monetary rewards are the incentives given to the employees of the organization in the form of money. Some employees are motivated only if there is a money element involved. The monetary incentives

are mostly given based on the performance of an employee. The monetary incentives given to the employee are direct benefits to the employee and are considered as exposure to the employer.

Some of the monetary benefits, which are given by the organization are

⦿ Profit-sharing, ⦿ Stock options, ⦿ Bonuses, ⦿ Commissions, ⦿ Merit pay, etc.

NON-MONETARY REWARDS

Non-Monetary rewards are the benefits given to the employees of the organization to increase the employee job performance, employee loyalty towards the organization, employee morale, etc. The Non-Monetary rewards as the name suggest do not involve direct money. i.e., the employee doesn’t get any money but he gets various benefits like,

⦿ Promotions, ⦿ Food coupons, ⦿ Company uniforms, ⦿ Flexible timings,

⦿ Healthcare Benefits,

⦿ Life insurance policy, etc.

Many studies have been conducted and found out that, the benefits which are in non-monetary form derive more benefits to the organization because it involves some form of emotional bondage with the employees which increase employee loyalty, which automatically increases job performance.

Difference between Monetary and Non-Monetary rewards

MONETARY REWARDS NON-MONETARY REWARDS

Monetary rewards are the incentives which involve direct money to the employees. Non-Monetary rewards are the incentives which do not involve direct money to the employees.

GIVEN TO

Monetary rewards are given to the employees who are extremely performing or extremely talented. Non-Monetary rewards are usually given to all the employees of a certain level to offer them convenience and security.

NATURE

Monetary rewards can work as a negative force to the organization because the people of the organization who are getting monetary rewards only concentrates on money by leaving the morality. Non-Monetary rewards always act as a positive force because the people who are getting non-monetary rewards usually don't get attracted to money and focus on the emotional and psychological benefits.

PERCEIVED AS

Monetary rewards are considered as an expense to the organization because it is an additional payment to the employees. Non-Monetary rewards are also considered as an expense to the organization but there is no direct money given to the employee.

CONFLICTS

Sometimes monetary rewards given to one employee may arise conflict in the other employee and there would be a problem of disturbed relationships among the employees in the organization. Non-Monetary rewards do not arise any kind of conflicts within the employees besides they encourage healthy relationships among them.

CONCLUSION

Anyway, there prevails dual opinion among the managers of the organization in matters of monetary rewards and non-monetary rewards. Every reward have their own advantages and disadvantages and not every monetary reward makes the employees motivated and there are many problems associated with every type of reward because the perceptions of humans differ from one other.

Spread the Differences

स्रोत : diferr.com

Monetary vs non

Whether you are a small business owner or a human resource professional you will find it essential and advantageous to incentivize your employees occasionally to ensure a smooth running, effectiveness, and expansion of your business. Incentivizing brings great benefits. It enhances employee morale and renews dedication which in turn cultivates efficiency, higher productivity, better customer […]

Monetary vs non-monetary incentives

Posted By Terms Compared Staff | Aug 28, 2020 | Management |

Whether you are a small business owner or a human resource professional you will find it essential and advantageous to incentivize your employees occasionally to ensure a smooth running, effectiveness, and expansion of your business. Incentivizing brings great benefits. It enhances employee morale and renews dedication which in turn cultivates efficiency, higher productivity, better customer service, and results in greater sales revenues and ultimately profits. Incentives can be categorized into two – monetary and non-monetary incentives. Monetary incentives are quite straightforward and represent quantifiable cash benefits. Non-monetary incentives come in the form of opportunities or tangible gifts which have an underlying monetary value as well.

This article defines and explains monetary and non-monetary incentives in more detail and highlights the difference between two.

Definitions and meanings

Monetary incentives

Monetary incentives are solid cash rewards which are presented to employees for exceptional performance or attainment of long term goals. As the name suggests monetary incentives have a monetary value and the employees can instantly recognize their exact worth. Such cash rewards can take several forms like merit pay, scheduled bonuses or commissions, stock options, mutual funds, and other forms of profit sharing and even extended vacation time.

Monetary incentives are the most straightforward method of showing appreciation and encouraging motivation. Since they hold an undoubted appeal for all employees, they more or less help maintain a positive work environment. They are clear and easily understood by employees. They help solve the challenges of a small business owner like lack of proper management or a stringent budget who can easily offer an annual reward instead of a pay raise. They also do not require any working on behalf of the management and no personalization is required as money speaks for all.

Despite being obvious, monetary incentives can create a turbulent workforce environment since they are mostly awarded to the top achievers only. This causes colleagues to become competitors and battle each other to attain their desired goals. They may create hurdles for each other disrupting teamwork and affecting the company at large. In short, they may crush the spirits of the employees who are left out. There are also some instances when an employee cannot relate his accomplishment to the incentive and denies it inhibiting the anticipated improvement.

Non-monetary incentives

Non-monetary incentives are presented for exceptional job performance or attainment of special goals that add value to the company such as achievement of sales goals, completing professional training, certifications and conducting successful research programs etc.

They don’t have a consistent form and are specifically tailored according to the needs of the employees. This implies that the management or the business owner has to take several considerations into account before handing them out like employee age, career-stage and proximity to retirement from job etc. This has to be managed by the human resource (HR) department that should conduct a comprehensive evaluation program to match employee preference.

Motivational non-incentive rewards do not involve cash but are replaced with opportunities and benefits like vehicle provision and allowances, healthcare benefits, life insurance, and provision of electronic gadgets.This shows that non-monetary incentives also have basic monetary value and are also worthwhile. Research has also proven that employees further appreciate when given a choice in these allowances.

Companies are now witnessing a new incentivizing trend by using tangible rewards that are known to have multiple positive effects on the business. This is due to the simple reason that employees tend to appreciate tangible gifts more because it empowers them to show it off in their circle. There are many examples of such gifts like gift cards, tickets, gadgets, branded apparel, watches etc. and the possibilities are just limitless. Employees feel that the boss is being thoughtful and kind and view them in a favorable light.

This insight can be leveraged to the company’s benefit. If the employee is photographed with the incentive showing his accomplishment and the picture is displayed publicly, it will not only be a reminder for him but will boost the spirits of all other employees. The incentive can also be advertised during the recruitment stage for marketing.

Difference between monetary and non-monetary incentives

The main points of difference between monetary and non-monetary incentives are given below:

1. Represent different forms

Monetary incentives represent quantifiable cash rewards presented for accomplishments, whereas non-monetary incentives have multiple forms like opportunities, allowances and include gift items etc.

2. Effect on employee behavior

Research has shown that monetary incentives encourage compliance in associates whereas non-monetary incentives amplify innovation and risk-taking in their decisions.

3. How employees perceive them

Since monetary incentives are clear, employees understand their worth easily. In the case of non-monetary incentives employee reaction is unpredictable; some might appreciate gifts, and others might deem them useless items.

स्रोत : www.termscompared.com